COMPETITIVE SALARIES FOR COMPETENT AND HONEST GOVERNMENT (MOTION)

[Mr Speaker in the Chair]

Order read for Resumption of Debate on Question [31st October, 1994],

"That this House endorses Paper Cmd. 13 of 1994 on "Competitive Salaries for Competent and Honest Government" as the basis for setting salaries of Ministers and senior public officers." - [Prime Minister]

Question again proposed.

Mr S. Dhanabalan (Toa Payoh GRC): Mr Speaker, Sir, on a point of clarification. I said in my intervention on Tuesday that the general election is the right forum to determine the electorate's support because it puts the issue in a total and correct context. I want to clarify that the point that I wanted to make is that issues like these are not issues that should be decided in isolation through a referendum. These are issues that can be seen in context in a general election. But this does not mean that the motion before this House should be kept in abeyance until the next general election.

This system of linking Ministers' salaries to private sector salaries was an issue in the last general election. Fine-tuning the system, as is proposed in the White Paper, will, I am sure, be an issue of the next general election and in many more general elections to come until it becomes accepted as conventional wisdom. It does not therefore mean that the motion before the House should be postponed.

Dr Wang Kai Yuen (Bukit Timah): Mr Speaker, Sir, after the Senior Minister's speech on Tuesday, putting his prestige and life-long experience behind the concept of benchmarking Ministers' pay to the top income earners in Singapore, there is very little anyone can add to the debate. So I beg your indulgence to let me proceed.

The concept of benchmarking civil servants and Ministers' compensation with the private sector is, I believe, readily acceptable by most Singaporeans. The question is: where to set the benchmark? In the case of the Ministers, as the Senior Minister has said, who else has the range of experience to judge? Definitely not the general public. I do not know about my colleagues in this House, but I would definitely disqualify myself to judge as well. Perhaps the persons to judge, besides himself, would include the Prime Minister, the serving Ministers and those retired Ministers.

Since it would be inappropriate for serving Ministers to comment on their own compensation, this House could benefit from the input of our immediate past Ministers, namely, Mr Dhanabalan, Dr Tony Tan and Dr Yeo Ning Hong. Mr Dhanabalan has spoken. I have always respected Mr Dhanabalan. From the many discussions we had with him in the Members' Room, one can come to the conclusion that he is a righteous man, a religious man, a man of high moral principles. On Tuesday, when he disclosed that he did not even know how much he would be paid when he first entered politics, I applauded. My esteem for him has climbed up several notches. Mr Dhanabalan said that he is old-fashioned and belongs to the age of dinosaurs. He conceded that the new benchmark for Ministers will give the Prime Minister the tools to assemble his team. I believe we should listen to him very carefully.

On the other hand, how about Dr Tony Tan and Dr Yeo Ning Hong? What do they have to say about the new benchmark? I would be glad to listen to them.

Mr Speaker, Sir, I would agree that if pay, and pay alone, is the way of getting successful Singaporeans into the Cabinet, we should remove that stumbling block once and for all. In fact, why stop at two-thirds? I say, pay the man his market rate or more to attract him into the Cabinet.

On the other hand, without sounding disrespectful, may I ask the Senior Minister and the Prime Minister whether pay alone will solve the problem. This problem is not new. The Senior Minister himself admitted that he had been grappling with it for a long time. And yet, he always mentions increasing the Ministers' pay from time to time to tackle this problem. As such, I have gained the impression that the Cabinet seems to think this problem is purely one-dimensional.

With my limited experience as a manager, what I have learned working for a multinational company like IBM and Xerox, recruiting and keeping the right people in the company, my understanding is that human resource management is a multi-faceted issue. These corporations' research shows that time and again, pay in itself is ultimately not a motivating factor. Pay increase that is tied to performance is a motivating factor, but absolute pay level itself is not. One does not throw money at the problem just to solve it, unless one is looking for a quick fix. Maybe more senior and more experienced managers in this House, including CEOs, will bear me out in this issue.

Sir, I am not sure whether anyone has taken note of the various factors people have mentioned when they declined invitations to join the Cabinet. As Mr Dhanabalan said, those who declined rarely mentioned pay. Did they mention others and did the Cabinet look into those other negative factors? Have we tried to do something about those factors? Dr Ow chin Hock, in his speech, mentioned a few factors, such as relationship between fellow members in the Cabinet, teamwork, job satisfaction, and I would add another to this list, career path. I believe anyone of ministerial calibre in Singapore will definitely ask what is the career path for him if he were to join the Cabinet. What is life after being a Minister? Is joining the Cabinet a right career choice? Would a stint in Cabinet give his career a boost or is it, like the Senior Minister said, walking into the sunset after leaving the Cabinet? I think all he or she has to do is to take a look at the retired Ministers and he will come to the conclusion that the prospect is not that promising.

The Senior Minister mentioned in his speech that a former Cabinet Minister has petitioned to the Prime Minister for an adjustment in his pension. We all know that Dr Goh Keng Swee left GIC and became a paid consultant. Even our immediate past Ministers, Dr Yeo Ning Hong and Mr Dhanabalan, still physically very healthy and strong, and very agile mentally, have already retired. The impression one gets is that for these very good men, the best years were taken out of their life and, once out of the Cabinet, they are left on their own. Is this impression not a major deterrent for anyone intending to join the Cabinet? So I would like to ask: can pay alone overcome this problem?

The answer is yes, but to do so, just as the Senior Minister has recommended, the level has to be set very high, tying to the top income earners in this land. But would it not be better if a stint as a Minister is considered a step upward so that career-minded Singaporeans will find it attractive to serve? Would it also be kinder to the men and women who had served the nation well?

When I speak up, do I begrudge the Ministers for their pay? Absolutely not. As an old Member of Parliament, who has since retired, used to say, "Ministers are paid not just for what they do, but are also paid for what they can't do, don't do, and will not do.' Very simple words. Very wise words. 'Can't do, don't do, and will not do' but they succinctly capture the gist of the matter. I say our Ministers deserve every dollar they make.

Why then am I taking the time of this House to delve into a topic so forcefully and eloquently dealt with by none other than the Senior Minister? Because of the various immediate ramifications. Let us stop for a minute and think one step beyond the immediate problem of getting talented and targeted people into the Cabinet. What are Cabinet Ministers? They are also political leaders. They have to win elections. Mr Dhanabalan said that they have to bring the Party through the next general election and future general elections. So let us stop and think about the problems these Ministers would face in mobilising the people when everyone in Singapore knows that when they look at the Ministers they are one of the top 100 earners in Singapore, come high or lo.

As political leaders, besides GDP growth, price of our homes, employment, our Ministers have to sell unpopular policies to the people. To name a few, reduced medical benefits to civil servants, higher COEs, GST and, at times of crisis, we have to ask our people to make sacrifices. Just think about how the people would have reacted if this pay formula were in place when the Deputy Prime Minister, then Minister for Trade and Industry, moved in this House to cut CPF contribution of everyone in Singapore by 15% to pull the nation out of the 1985 recession. A big question mark, isn't it?

Sir, political leaders are also entrusted with making very difficult and tough decisions that will touch our lives very deeply. Past decisions of this nature include calling up young men for national service, mother tongue education, restriction of right to reside in Singapore for foreign spouse, corrective work orders, etc. Future decisions could involve sending our young men into combat in defence of Singapore. Only political leaders with the moral authority to lead could make such decisions and be obeyed. I think we should not dilute that moral authority. Hence, the calibre of a political leader cannot be measured by his earning power alone inside or outside the Government. Neither should we select one just because he is very successful in his own profession.

As political leaders, our Ministers have to mobilise grassroots leaders in the RCs, MCs and the CCCs, all of whom are volunteers. The Senior Minister spoke about them and how they are the people that turn the concrete jungle of Singapore into a living community. These people serve without pay and often times dig into their pockets to pay in order to serve the community. I think this emphasis on Ministers' pay would not go down very well with them. Even before a single new blood could be inducted into the Cabinet under the new formula, every serving Minister's pay would have gone up. I believe the prestige of the Ministers might be eroded in the short term since they will be the main beneficiaries under this proposal. This disruption in rapport would take time to amend. Thus, I find the timing of this White Paper to be a bit perplexing. With the next general election rumoured to be just around the corner, Mr Speaker, Sir, why do we choose this time to introduce a very, very touchy subject?

Sir, this problem of paying our political leaders well and yet at the same time have to placate voters' sentiments is not unique. In fact, it is an inherent problem of the parliamentary system we inherited from the British. The Prime Minister in his speech already pointed out the corruption in the current British Parliament arises partly because of this reason - poor pay. The Senior Minister also pointed out in his speech that the calibre of the British Minister is not high compared to the private sector, for the very same reason. So is it possible to say that the system itself is part of the problem? If we were to have high pay for our Ministers, who is to say that no future Singaporean politician will use the slogan, "Vote for me, and I'll cut the Minister's pay by half," and thereby win votes and get into Parliament.

I remember, as a young man, when the Senior Minister, who was then the Prime Minister, cut his own pay and all the pay of the civil servants, I applauded. Today, wouldn't a young man applaud another politician vowing to do the same thing, and gaining a lot of popular support?

Sir, the United States, which was also a British colony, did not adopt the Westminster system when it became independent slightly over 200 years ago. Why? Perhaps their founding fathers did not change the system just to be different. Perhaps they had given this problem of recruiting talent into government some very deep thought. Because, at that time in their history, theirs was a new country without a landed ruling class, like the British. It was a situation very similar to Singapore. They innovated and devised a new system with separation of the judiciary, legislature and the executive. A member of the US executive can be inducted straight from the private sector. The best could be nominated by the President and confirmed by the legislature. To distinguish them from the politicians, they are even given a different title - Secretary of Department. They serve their terms, they contribute to the nation and they return to the private sector.

The Senior Minister says that political entrepreneurs are needed for success. That is true. And he looks for them in the private sector. But this process of selecting and inducting capable and talented individuals from the private sector is not part of the Westminster model of government that we have in Singapore. It is more like the US executive mode of government. May I humbly suggest that this is also part of the root cause of the difficulty in inducting talent into the Cabinet. We are trying to use a very old instrument, the British Cabinet system, to serve the needs of the Government in a very modern world. The White Paper proposes a mechanism using pay to overcome this problem of the system. May I ask the Prime Minister whether we should look into introducing fundamental changes in the Cabinet system to address this? Perhaps we too should innovate and create a new system to meet Singapore's needs. Could we not have a mixture of political and non-political Ministerial positions in the Cabinet? Could we not use the NMP mechanism to induct private sector talent at their existing income, existing pay, into those non-political posts? These are not new ideas. The Deputy Prime Minister, in moving the NMP Bill, had touched on this.

When the Cabinet has serving Members from the private sector, drawing private sector pay, then benchmarking political Ministers' pay would no longer be a matter of faith. I believe there are merits in this proposal, the details of which can be delved into later. Basically, I think it would be a shame that at this time, when the House is debating a substantive change to the Ministers' pay package, we do not explore this option as well.

Sir, I think we have to decide whether our Ministers are political leaders or just very capable political entrepreneurs. As long as we prefer our Ministers to be political leaders, our people would like to see them as individuals, motivated by idealism, fired by a sense of mission and driven by a desire to serve.

Encik Othman bin Haron Eusofe (Marine Parade GRC): Mr Speaker, Sir, like Dr Wang, it is really difficult to make a contribution after the Senior Minister has spoken. In fact, I had to revise my speech after Monday. And after the Senior Minister has spoken, I really do not know how to revise my speech. Anyway, Sir, with your indulgence, I would like to make a contribution and a few comments on the proposed White Paper.

Sir, the business of government is becoming more complex and we have to ensure that we can get a fair share of our top talents from the public as well as the private sectors to take the challenge of political leadership, to become a Minister or to serve in other political appointments. Good government should not be taken for granted. The issue today is how we should attract top talents into Government and how they should be compensated to ensure that they will not be lured away by the attraction of the private sector in Singapore as well as the booming regional economies.

Sir, on the salaries of Ministers, I would like to make the following suggestions. I would like to suggest the establishment of an independent salary commission for Ministers and political appointments compensation package. This is not a new proposal. Some Members of this House have raised it before. It will not solve the problem, but I believe it will help to minimise or moderate it.

Sir, one of the criticisms of the White Paper is that the Ministers are setting their own salaries. I do not think this is true. It is a wrong perception. Let us therefore remove this unnecessary difficulty so that the issue of what is a right compensation package for Ministers and political appointments can be examined in a fair and objective way.

The key task of the commission is to ensure that there is a proper compensation package so that we will be able to attract a fair share of good and honest men and women into Government. The commission can examine the salary and compensation package of the private sector, the sacrifices made by those who join Government, including the loss of opportunities, especially for those who resign from the private sector in their early 30s or 40s to enter politics.

How we pay or compensate the Ministers and other political appointments today is different from how Ministers were paid in the past. And it may well be different in the way Ministers and others in politics will be paid in the future. The motivational factor will be different. They will change with time and with each succeeding generation.

Sir, just let me give an example which appeared in yesterday's Straits Times. I believe Members must have read yesterday's Straits Times, at page 3, the report entitled "UK Minister also a part-time dentist". The report said that one of the British Government's newest Ministers had been given permission by the British Prime Minister to work three days a week as a private dentist. I am not sure whether we need to go into such an arrangement in the future. But if we have to do so, then it would be better if such a recommendation comes from an independent commission, made up of successful businessmen, private sector managers and professionals. We may well have to do so if we take in persons who only want to serve a short term in Government. Here, perhaps let me just quote what the Minister, Sir Paul Beresford said:

`I don't expect to remain in politics all my life so I need to keep my hand in as a dentist.'

It may well be that some of these leaders that we want to attract may just want to serve a short term in Government and want to keep abreast of changes in whatever professions they come from, and therefore giving them an arrangement like this may well serve a purpose. I am saying that these are some of the things we need to look into and see how it can work, so that we can get the best talents in Government.

Sir, on the proposal to work out a benchmark, I agree with proposals made by some Members that instead of working on the average earnings of the top four earners in the six professions, which some have pointed out to be individual or person-based, we should work instead on a percentile basis, taking the top 10-15 percentile for Ministers. Here, we will broaden the base. Taking this approach, I do not think we need to work on a discount basis, but just pay the Ministers based on the average of what the top 10-15 percentile are paid.

As a trade union leader, it is not easy for me to explain to workers the proposal to pay Ministers salaries which are mind-boggling, especially when their average salary is around $1,000-$1,500 per month. However, we have to accept the reality. We have to be realistic. If we want good government, we want to be competitive, we want to have sustainable economic growth, we want good jobs and a good quality of life, then we must have good talents in Government and we must compensate them well.

Sir, on the civil service, I agree that we should pay competitive salaries to attract some of the best to serve in the civil service. Here, we are focusing on the top end, that is salaries for the Administrative Service officers. I think we should also look at the salaries of the other levels, right to the junior levels and pay them salaries which are competitive and in accordance with their performance and contribution. To have an effective civil service, the civil service must work as a team. We cannot have feelings that some are paid much better or more than what they deserve while others are not given the right salaries. I hope that with this system of Personnel Boards which is now being introduced in the civil service, the Personnel Boards will look at the system of compensating civil servants and will make sure that the salaries which the other grades in the civil service are receiving are fair and competitive.

Sir, on that note, I support the motion.

Dr Tony Tan Keng Yam (Sembawang GRC): Mr Speaker, Sir, thank you for allowing me to join in this debate.

I had not intended to speak in this debate originally, because I had spoken last year, when the subject of Ministers' salaries was discussed, and I thought I made my views clear. So I felt there was no need to repeat myself.

However, since Dr Wang Kai Yuen has asked for my views, let me just say that whatever I said when this topic was debated at the end of last year, I am still of the same view. In fact, I am even more convinced that you cannot go back to the past. We are dealing with a new generation today. The Government is trying to tackle a very difficult problem, as my colleague, Mr Dhanabalan, said yesterday. The problem can be stated very simply. As the Senior Minister said, how do you ensure that there will be a continuing inflow of talent, of young people, into the Government to fill the ministerial ranks and the various offices in Government so that Singapore can go ahead. That is the crux of the whole issue.

The first generation leaders were motivated by the desire to build Singapore. That was the great challenge. For myself and my colleagues, when we were asked to take up office, the challenge that was put to me by the late Finance Minister, Mr Hon Sui Sen, was how to ensure that Singapore could go ahead, that the success of Singapore will not crumble and will not vanish with the passing of the first generation. That was a great challenge. That was something that could motivate people to go into Government then, to give up their private sector jobs.

I can say, quite honestly, as with my colleague, Mr Dhanabalan, that when you are faced with a challenge like that, salary is not a consideration. But what do we have now? We have a successful Singapore. What are the great challenges? We fine-tune the system. We try and solve the COEs by building more MRT, providing better transport, tinkering with the system. We are also dealing with a younger generation of Singaporeans who are more careful, whose options are wider, who consider more carefully before they decide to take the plunge into politics.

Sir, these are the realities of life. You cannot change them. I think that it is best for the House to take the bull by the horns. Have a system of remuneration which would pay Ministers and political office-holders well, so that at least you mitigate that difficulty, make it less unattractive for younger people to go into politics and take up office in Government. If you do not do that, in the long run Singapore will be the loser.

I support the motion to pay competitive salaries for honest and competent Government. I say, support the Prime Minister, give him the tools. He has a very difficult job. We should not make it more difficult for him. I hope that answers Dr Wang's question.

Dr Kanwaljit Soin (Nominated Member): Mr Speaker, Sir, thank you for giving me the opportunity to speak.

Singaporeans can say with pride and certainty that we have had an honest and competent Government since the PAP came into power. Singaporeans can also say with certainty that we want to continue to attract people who will form an honest and competent Government. But how do we achieve this? That is the burning question. That is what we should be debating and not the formula or the benchmark or the various permutations and computations of it. But how do we get honest and competent people into Government?

The problem that the Prime Minister faces and that all of us face in this country is how do we ensure that we will continue to have political leaders who are competent and honest people with vision, and the bureaucracy remains clean and effective. Although this is a national challenge, it is the Prime Minister who bears the most immediate and direct responsibility, and we all have to help him in his task, as Dr Tony Tan just said.

However, this challenge is very complex and there is no single obvious solution. But it appears to me and many other Singaporeans that the White Paper seems to suggest that the answer lies in increasing the remuneration, and once this is done, the problem will be solved. I think this financial approach to a problem of human motivation is a unifaceted answer and even a little simplistic. I think my colleague, Dr Wang Kai Yuen, also talked about this.

The Prime Minister in his speech said that he wants the most capable and most honest people in his team, and to ensure this, he has taken the pragmatic approach of offering higher financial rewards to Ministers and top civil servants. The Prime Minister has made an appeal to give him our backing.

Mr Speaker, Sir, the Prime Minister knows that many of us in Singapore would go a long way to give him our support. There is no question about that. But many of us feel, and I am reflecting what other Singaporeans have told me, that we would be neglecting our duty if we did not point out to the Prime Minister that we do not agree with him that the White Paper offers the solution that he is looking for. He has said that the formula dealt in the White Paper would head off the problem of weak leadership in future years. Sir, with due respect to the Prime Minister, the answer is not so simple and it may not be the answer at all.

Let us ask ourselves a few fundamental questions: Why are able Singaporeans reluctant to take on the risks and public responsibilities of a political career? Is pay the main motivator? If we increase the remuneration even more from the present reasonably high level, will we be able to attract the right talent? By increasing the salaries of Ministers to what might seem astronomical levels to the person in the street, are we risking a possible political backlash? Let us go to the first important question: Why are able Singaporeans reluctant to take on the risk and public responsibilities of a political career? The White Paper proposes a solution to this problem, but let us look at the problem first. Before we can appoint Ministers, we have to look for MPs. Only after becoming MPs and showing their mettle and ability, can we follow up by appointing them Ministers.

On 23rd March 1989, Mr Lee Kuan Yew, then Prime Minister of Singapore, said in this House, and I quote [Hansard, Vol. 53, Col. 805]:

`To get good Ministers, you must have good MPs because they come from the MPs."

The crux of the matter, therefore, Mr Speaker, as implied by our former Prime Minister, is not that we cannot find enough good people to become Ministers, but that we cannot find enough good people to become MPs. Therefore, what we should be doing is not reviewing the salaries of Ministers, but trying to get at the reasons why people are not keen to come forward to become MPs and Ministers. Could one reason be the great affective divide written about so eloquently by Catherine Lim, one of our foremost writers? Should we be looking into this lack of bonding between the present leaders and the people, especially those with the potential but not the willingness to come forward for political office? Could another reason be that we have depoliticised our citizenry? Could yet another reason be that we do not have a responsive national framework to allow people to participate in the political arena? Whatever the reasons, Mr Speaker, Sir, I am sure that remuneration has little to do with the reluctance to come forward into the political sphere.

To illustrate my point, I would like to quote from a parliamentary speech on 23rd March 1989, made by Mr Goh Chok Tong, then First Deputy Prime Minister, when he talked about the difficulties of recruiting political talent and giving examples of reluctant politicians [Hansard, Vol. 53, Col. 751]:

`Do you know how many times I had to see Dr Richard Hu, Wong Kan Seng, George Yeo, Mah Bow Tan and Seet Ai Mee before they said "yes"? At least three times each and over many months.'

Mr Goh Chok Tong then went on to say [Hansard, Vol. 53, Col. 752]:

`I got them to say "yes" - Dr Richard Hu, Wong Kan Seng, and the others because I persisted and appealed to their sense of duty, duty to their fellow citizens, to their friends and relatives and to their own family. They did not volunteer to serve. They were called up. They finally agreed because of a sense of service to the nation. Even if we had paid them more than what they were earning, they would still not have come in without intense persuasion.'

Here, Mr Goh Chok Tong has stated very clearly that remuneration did not at all come into consideration when Dr Richard Hu, Mr Wong Kan Seng, BG Yeo, Mr Mah Bow Tan and Dr Seet Ai Mee decided to enter the political arena. They only agreed to step forward as Mr Goh Chok Tong appealed to their sense of service to the nation. Mr Speaker, Sir, does this not teach us a clear lesson? It is obvious that what persuades worthy people is not a big financial carrot dangling before them, but their sense of duty. Let us not under-estimate the dynamics of the desire to serve the nation and send a wrong signal to the public.

Next, we come to the question of retaining Ministers. How many of them have left their post because of remuneration? Not Dr Tony Tan, not Mr Dhanabalan, or Dr Yeo Ning Hong, to name a few. Thus, remuneration is definitely not a factor in retaining Ministers. Therefore, although we may never have another Mr Lee Kuan Yew, Dr Goh Keng Swee, Mr Rajaratnam, or Mr Lim Kim San - all of whom entered politics with no thought at all of financial rewards - Singapore has not done so badly after all. We still have the likes of Dr Richard Hu, Mr Wong Kan Seng, BG Yeo, Mr Mah Bow Tan, Dr Seet Ai Mee, Dr Ker Sin Tze and Assoc. Prof. Ho Peng Kee. None of these people were motivated by money. Now we have heard Mr Dhanabalan and Dr Tony Tan bear testimony to the same fact. I am sure this applies to all our present leaders.

In the face of this overwhelming proof of the altruism of our present batch of leaders, how can we say that altruism died with the days of Mr Lee Kuan Yew and the Old Guards? However, if we persist in equating public service so closely and intimately with high remuneration, then we will surely kill altruism and infect our younger generation with the seeds of non-altruism. Are we inadvertently breeding materialism in our able young people and making light of their nobler instinct? Let us all look at our own children. Do they appear to us to value only money? If the answer is yes, then have we abdicated our duty and our role to instil the right values of idealism and service to the nation into our children? What have we been doing? It may be time, then, to look at ourselves and not just accept that conditions have changed and the younger generation looks only for material rewards, and then cater for this base instinct by jacking up the salaries.

In spite of what some other people may think, I have faith in the younger generation. They are no better or worse off than us. After all, we made them. I disagree that there are no challenges left for Singapore leaders. I think the greatest challenge we face is the management of our success, and this will not continue if we just fine-tune our policies. In fact, the challenge is even greater now. Creating wealth is one big challenge but to manage success is yet a greater challenge.

Now, Mr Speaker, Sir, let us go back to the financial sacrifice written about in the White Paper. We are given to understand that many of the best in our land who are in the private sector will not come into politics because of the financial sacrifice they have to make, and their families will not accept this. This thesis is not valid. Because we already have in place a mechanism to reward those able people who are willing to leave the private sector and take on the public responsibility of becoming a Minister or a Minister of State. The mechanism of make-up pay for Ministers ensures that there is no financial sacrifice. This important provision has not been mentioned at all in this debate. The existence of this provision removes an important pillar for the rationale of increasing remuneration for Ministers.

Let me first elaborate on the provision of make-up pay. Here I would like to quote again what Mr Goh Chok Tong who, as the First Deputy Prime Minister, said in this House on 23rd March 1989, and I quote [Hansard, Vol. 53, Col. 758]:

`Even with the higher salary grades for Ministers, we will still want from time to time to induct successful and able men from the private sector into the Cabinet, men who are earning far more than the revised pay for Ministers, to serve for one or perhaps two terms. If such a person has first to be tried out for a period as a Minister of State before being appointed a full Minister, the problem becomes more acute.

To accommodate these possibilities without upsetting the protocol order, the Government is introducing a system of make-up pay, similar to that practised with reservist national servicemen.

In future when a Minister or a Minister of State is appointed, he may receive make-up pay in addition to his rank pay. In other words, if he earns more than that of a Minister of State and he is appointed as a Minister of State, the difference will be paid to him by way of a make-up pay, but he will not receive the entire difference. He will receive only up to 90% of that difference. The calculation will be based on his income tax returns for the last two years before his appointment. The make-up pay will not be carried on for ever. A Minister can continue to receive this for up to two terms of office.'

Mr Goh then continued:

`We are introducing this system of make-up pay because I believe this will enable the country to benefit from the services of those who do not wish to make politics their entire career, but who have a contribution to make to the nation. They can now become Ministers without having to make too much of a sacrifice.'

I would like to repeat the last sentence of what Mr Goh said: "They can now become Ministers without having to make too much of a sacrifice." Well, that says it all. With this system of make-up pay in operation, what is the rationale for the new benchmark to attract top private sector talent into political office?

Mr Goh Chok Tong then went on to say -

`The system of make-up pay will not apply to existing office-holders. It will be used primarily to induct successful people between 35 and 45 years of age to be tried out as Ministers of State before they are appointed as Ministers.'

I presume that the make-up pay provision is still valid as I could find no later statement rescinding or abolishing it.

Aside from the provision of make-up pay, a Minister who has served eight years is entitled to a pension and he can return to the private sector. Public sector service significantly appreciates the value of the individual concerned, by virtue of its function and demands, and the private sector recognises this. What I am saying, Mr Speaker, is that an ex-minister has enhanced value.

From what has been said in this House, I understand that both Dr Ker Sin Tze and Prof. Ho Peng Kee did not apply for make-up pay even though they were earning more in the private sector. What does this say? Money is not what motivates people.

Now, I would like to address the other less tangible elements of sacrifice - the loss of privacy, the loss of family time, etc. This is the price paid by anyone who is prominent in public or community service and is thus unavoidable. Money cannot compensate for this personal sacrifice.

But the other side of this sacrifice for Ministers is the challenge of being able to help forge a dynamic society, of being able to put their beliefs into practice and being able to have the freedom to live by their ethical values.

Many of us would consider exercising these privileges the highest reward and we would give an arm and a leg to be able to realise these ideals and beliefs. This is the other face of the sacrifice that Ministers have to make. In fact, this may be the most important perk and not a sacrifice at all.

Mr Speaker, if we keep on insisting that money is a major factor in attracting and retaining our Ministers, then some grave consequences could follow. Our citizenry could become disillusioned with the output of our Ministers. There will be an erosion of leading by social ideals. What about our national ideology of putting society above self? Our young people will be seduced by the belief that a man's worth can only be measured in gold. Surely, this is not a part of our Asian and Confucian values or of our national ideology of shared values.

Furthermore, if we pay our Ministers salaries comparable to the top earners in the private sector, will this cause public cynicism and lead to the view that a Minister is just another paid knowledge-worker? Here, I would like to quote the Straits Times editorial of 25th October 1994:

`Put bluntly, it is clearer than ever before that a Minister is, in many ways, no different from other wage earners.'

Is this the public attitude we want to foster towards those holding high political office? Do we want the loss of prestige for our leaders, as has happened in many other countries? Prime Minister Goh once said that the political leaders of Singapore are its "Jun Zi" (wise and benevolent leaders and not enticed by profit). If we tarnish this image, then will this not also affect the mandate of the political leaders to rule with wisdom and benevolence? We cannot afford a possible public backlash of cynicism and disillusionment against our present leaders. This could lead to a freak election result - a result that the PAP and many of us in Singapore dread most and want least.

Mr Speaker, Sir, I would therefore like to urge the Prime Minister to exercise caution and restraint in increasing the salaries of the Ministers further. Reasonable Singaporeans, and there are plenty of us around, accept that our Ministers must be paid well. We respect and look up to our Ministers and to the Prime Minister and realise the tremendous responsibility on their shoulders. We, therefore, do not grudge them at all their present salaries which have been revised substantially since January 1994. However, if we keep on talking about the worth of Ministers in monetary terms, then the attitude of our people will harden and they will question, query and probe the inter-relationship between political office, public service and remuneration and weigh the worth of each on a weighing scale.

I, therefore, earnestly urge the Prime Minister to leave things as they are where the salary of Ministers is concerned.

We have already seen that pay has not been the motivating factor in getting our present batch of leaders. Pay has also not been responsible for them leaving office. Also, with the make-up pay scheme in place, we are not being prevented in recruiting people from the private sector because of monetary concerns.

So, Mr Speaker, why do we want to raise the pay of Ministers further? It, therefore, appears to me that the White Paper is suggesting a solution to our problem which does not exist. The problem is not the lack of financial rewards that prevent people from accepting the offer of political office. The problem is that people do not want to take on the challenge of political office. Money has little or nothing to do with it.

As Prof. Walter Woon put it well earlier, it makes little difference to the quality of one's life or the life of one's family when you look at salaries beyond $60,000 per month. Beyond this reasonable and comfortable level, a further rise is like superfluous icing on a healthy cake. The icing does not make much difference to the baking of the cake but adds an unhealthy quality to the end product and here, the icing on the cake could extract a political cost.

Now, Mr Speaker, let me turn to the top civil servants' salary. According to the World Bank Report of 1992 which is shown in the Annex of the White Paper, Singapore pays its bureaucrats the best in the region. According to the table produced by the World Bank, public sector salaries exceed private sector salaries in Singapore. The comparison used is the upper quartile and this standard seems to be the accepted standard by the World Bank and internationally. Many private sector organisations also pay their top people salaries in the upper quartile as compared to others in the industry.

The present Superscale G annual income is $150,000 after the 1st January revision and this is what a bright 32 year old gets now as an Administrative Officer. The salary of $150,000 per year is 75% of the benchmark suggested by the White Paper. I realise there is a two year lag between the private and public sectors in using the suggested benchmark. However, we are not taking into account the civil service pension which adds another 15%. We are also not taking into account the prestige, job security and other advantages of public employment. Here, I would like to quote from the editorial of Lianhe Zaobao of 24th October 1994, as reported in the Business Times:

`... profit constitutes the most important factor in the private sector. When a company makes a lot of money, its senior staff members benefit from it. However, in bad times, it is not uncommon for them to suffer a pay cut or even retrenchment. On the other hand, civil servants, including those in very senior positions, need not face such risks. So it is important to ensure that the basic principles of public service are not violated when salaries of the public and private sectors are linked.'

I think many Members of this House have voiced their doubts on how inappropriate the 15P32 benchmark is. However, we also need to question whether the basic premise underlying the benchmark is valid, that is, the way to attract and retain top civil servants is by giving them competitive wages with the private sector. Is this premise true?

Derek Bok retired as the President of Harvard University in 1991 and spent a year writing a book on what should determine "The Cost of Talent" which is the title of his study. "Economists", argues Mr Bok, "will respond that if we do not let the market decide matters of compensation, who will? Yet even if no better alternative comes to mind, thoughtful people will look upon the results, not with comprehension and respect, but with bewildered disbelief." He was referring to the payroll of football teams, but this could equally apply to the benchmarks being proposed for top civil servants and Ministers. He goes on to say that factors other than money obviously influence career choices:

`The interest of the work involved - its intellectual challenge, the opportunities to be creative and exercise initiative ... the kinds of people who will be your colleagues ... the chance to help others.'

Mr Speaker, Sir, income is not the sum total of human life. This holds true even for the bright young people, whom we are so eager to label as caring only for material rewards. In the light of this analytical thinking, should we not review the whole picture of why bright and competent people are not attracted to the civil service and do not want to stay on in the service? Significantly, the late Mr Edwards Deming, the father of "total quality management", once said bluntly, "pay is not a motivator." People are much more influenced by the opinions of their colleagues and the intrinsic interest of their work, rather than by crass material rewards. In fact, in my conversations with some people in the civil service, I learnt to my pleasant surprise that there are some cases of people coming into the public sector from the private sector and who have taken a pay cut in doing so. Therefore, pegged salaries will not in themselves ensure that the right talent is attracted to the top posts and retained there. Attracting a person who possesses the right qualities will be more challenging and requires more than the promise of monetary rewards.

Also, with the establishment of the Personnel Boards for the civil service, we should allow them to function, after which we could zoom in more effectively into the causes of disaffection within the civil service. We tend to make too many changes simultaneously, without giving ourselves an opportunity to assess a particular major change - in this case, the creation of the Personnel Boards.

It seems to me, Mr Speaker, that many bright Administrative Officers plan their career path and follow it through at their own pace. This path consists of a stint in the public sector to gain experience and enhance their value, and then they get into a challenging and rewarding private sector job, and they end up as their own bosses. Those who have planned this trajectory will not be induced to stay longer in the civil service, even if we offer them much more than what they are getting. That is why it is important for us to look at what motivates bright young people. If they want to end up as their own bosses, then they are not going to wait around on the small chance of becoming a Permanent Secretary. After all, only one of them can become a Permanent Secretary. And so the other bright ones move out of the civil service while the going is good, ie, while the private sector is in need of them and they are in their 30s.

This is again another area that the Personnel Boards may be able to throw light on. In fact, what the Prime Minister said confirms my thesis, as the 12 Administrative Officers left the civil service, soon after substantial pay increases were announced on 1st January 1994. They were not seduced by the higher pay but followed their own planned career path.

Now, Mr Speaker, I would like to address the issue of how we should pay our Ministers and top civil servants. The recent pay increases announced for January 1994 have brought the salaries of Ministers and top civil servants up to a handsome level. I would like to suggest that we continue to use this as our base line standard, and then adjust this each year according to the NWC recommended salary increase. The performance bonus of 0-6 months for Ministers gives the Prime Minister enough leeway to reward those with bigger responsibilities or with bigger Ministries. For our civil servants too, I suggest that we keep to the present salaries with NWC increments and let our Personnel Boards become responsive to the needs of civil servants and then reassess the situation in a few years' time with the experience and knowledge gained from the operation of the Personnel Boards.

Finally, I would like to reiterate that I fully endorse the fairly high pay that our Ministers are getting now. But I would like to appeal to the Prime Minister not to raise the salaries any further for the short-term objective of attracting able people to become Ministers, and even the efficacy of this is in question and I have talked about this earlier, at the risk of long-term effects such as devaluing the worthiness of being a Minister and inviting public cynicism towards our political leaders and their commitment to office.

In concluding, I would like to say that we are not being penny wise and pound foolish by not endorsing the pay rise. Another few million dollars makes little difference to us as a nation or on a personal level. But before we endorse the motion, we have to be satisfied as to the answers to these questions. Why are we unable to attract top talent into politics and public life? Are we categorically sure that the main obstacle is a perceived lack of financial rewards? If we increase the remuneration from the present base which is already high, will we achieve our desired objective? Finally, what will be the political cost to the nation of this exercise?

Dr Tan Cheng Bock (Ayer Rajah): Mr Speaker, Sir, I would not speak for too long.

Mr Speaker: Much obliged.

Dr Tan Cheng Bock: Sir, I have never been inundated by so many phone calls and requests to see me ever since I stepped down as Chairman of the Feedback Unit, until recently, when the price of COE passed the $100,000 mark and upon the release of the White Paper on Ministers' salaries.

Let me share with you some of the comments and questions asked. Please do something about the COE. How can we be so insensitive as to ask for higher Ministers' salaries at this juncture when COE is so high and cost of living going up so fast? An ex-colleague of mine asked me to tell the Prime Minister and all the Cabinet Ministers, do not take the people for granted.

Mr Speaker, Sir, these are some of the unpleasant sentiments told to me, and it is with this backdrop that we are here today to discuss a formula to once and for all settle this issue of Ministers' pay. It is not going to be easy.

Ministers' pay has been debated many times in this House, and each debate is always charged with calls for personal sacrifice, commitment, integrity, ability and an appeal to be realistic and pragmatic and to pay well to get the best into Cabinet. The issue about having to pay Ministers well is now accepted by most Singaporeans. Thus, in January this year, this House approved the Ministers' new pay of between $587,000 per annum and $776,000 per annum, depending on the Minister's grade. Therefore, why are we doing another revision so soon after the January revision? Singaporeans are just beginning to accept the high salaries of our Ministers and before long, they are being asked to consider a new proposal to up further the salaries of our Ministers. We are asking too much, too soon.

The issue for discussion today is how much more should Ministers be paid and not why Ministers should be well paid. The hue and cry outside the House is simply this: that the Government has gone overboard on this issue. Again, it is not Ministers should not be well paid.

I will focus on the formula. We are asked in this House to support this formula to peg Ministers' salaries to the private sector's average salary of the top four individuals from the six professions. Is this the correct and proper thing to do?

Listening to opinions outside this House, there seems to be more people who disagree than agree. Those who agree genuinely want good people to help the Prime Minister, and they asked me to tell the Prime Minister to go ahead with the high salary without any discount even. But, unfortunately, there are more people who disagree. They disagree and argue that it was only in January this year that this House approved Ministers' salaries to exceed the half million dollars per annum. It was considered on the high side, but acceptable. But this present formula to up the salary to $810,000 per annum has made those who supported the January revision to sit up and ask these questions. Why do they need so much money? Are they saying that half a million dollars is insufficient that they need $810,000 per annum? Have the lifestyles of the Ministers changed so much that their needs cannot be met by the present salary? Why do politicians want to rank themselves against such top earners? Is it to justify their salary increase? Is the ranking so important? Nobody cares about the ranking, they told me, except we, politicians. These are questions asked. We cannot discount these questions. We should address them and see whether we can convince them that what we are trying to do in this House, to up the salaries, is justified. They are really sensible and genuine concerns.

Again, those who disagree argue that the top four earners have put their whole life in work and are probably at their peak or end point of their career. They have gone through a lot in life. They are very matured citizens. They command high salaries because they bring goodwill and talent to the company. The goodwill factor is important. It accounts for a big portion of the big salaries. Therefore, it may not be correct to equate their payment with politicians.

Further, Singaporeans want to know if the January revision of Ministers' salaries to the half million dollar mark annually was successful in recruiting men and women into politics. In other words, was the half million dollar package tested? If not, why are we pushing and asking to consider a new package of $810,000 per annum?

Pegging the Ministers' salaries to the top four of the six professional groups is a win-win situation. This point has been laboured. I would not want to labour it too long, but just to say that the top four may not necessarily be the same top four the following year. However, the Ministers' salaries will continue to be pegged to the top four earners irrespective of any change. Is the salary all that the Ministers will get? Or is there going to be more? This is what they want to ask. If you refer to page 12 of the White Paper, the fifth paragraph says:

`This benchmark figure is an estimated average, not a fixed entitlement for every Minister or civil servant. It includes basic pay, Non-Pensionable Annual Allowance (NPAA), Annual Variable Component (AVC), a typical Performance Bonus, a car allowance plus imputed tax on it, plus a new Special Allowance. The actual amount received will vary from Minister to Minister, and from officer to officer.'

The White Paper therefore stays silent on the bonuses that the Ministers will receive as proposed in the January revision. Does this White Paper's recommendations supersede the January revision?

There are some misconceptions about Ministers' pay which the Prime Minister must answer, and must clarify to the ground.

(1) Ministers need not pay income tax. We all know that this is not true. But that is what is being repeatedly questioned and asked by the ordinary Singaporeans.

(2) Ministers' trips are all paid for by the Government, including private trips. Again, this is not true. But that is the ground's talking.

(3) Family members also enjoy such privileges when they travel with the Ministers. Again, this is not true. But I think the man to really clarify all these will be the Prime Minister.

The question of accountability keeps cropping up when Ministers' salary is discussed. Some think that the Government is afraid to debate this controversial issue in Parliament and want to opt for a way by which Ministers are paid annually based on a fixed formula without having to come back to this House. It is sad to think that this Government has any hidden agenda. This is a transparent system. But to allay a more sophisticated and educated public, the Government must make the salary adjustment even more open. I would suggest that in the Budget for each financial year, under Section II, Summary Tables on Expenditure, we introduce an annex to state the total annual salary (including bonuses and all allowances) of all political appointees from the Prime Minister to Political Secretaries. This will allow MPs an opportunity to question Ministers' salaries during Budget time.

Sir, power, prestige and perks (the three Ps) have also been brought up in the debate. Many feel that the Minister has the power, the prestige and enjoys perks. These were not mentioned or factored into the salary in the White Paper. Mr Speaker, Sir, if you can take away one-third of the benchmark salary because Ministers must sacrifice when they come into politics, surely there must be a trade-off for power, prestige and perks. If personal sacrifice has been given a value, an arbitrary value of one-third the benchmark, can we make up a case for an arbitrary value for prestige, power and perks?

I suggest that this value be of one-sixth of the benchmark figure of $1.2 million. The White Paper gives an arbitrary value. I think I am not wrong to propose an arbitrary value. If we accept this one-sixth figure, then the total package, after the one-third discount and this trade-off value, will work out to be half of the salary of the top four in the six professions. This is still fairly high. It works out to $608,500 per year. This is the basic salary for the Ministers. The Grade II Ministers will get 12% more.

There have been proposals but the final outcome cannot be less than the January 1994 revision. Therefore, what I suggest is a compromise. Accept this formula but introduce a new element, a trade-off factor of one-sixth for the three Ps - prestige, power and perks. Money is an important consideration but we should not overplay its importance. Too big a jump at too short a notice has distorted the debate on Ministers' salaries.

Sir, there is a political culture handed down to us by the Senior Minister and his Cabinet and his whole team. It carries with it a strong political image of integrity, honesty, commitment and service to country. Their generation of Cabinet leaders and political appointees have carried themselves well in office and putting Singapore on the world map and paving the way for us to emulate and follow. They were a special breed. They were our heroes and they were our role models. I joined the PAP because of Mr Lee Kuan Yew and his team. They gave me a sense of pride and honour to be a Singaporean.

As regards our present Cabinet Ministers and political appointees, can we, looking at them from this side of the House, say they entered this Chamber and became Cabinet Ministers for money? I do not think so. They share the same image of honesty, integrity, commitment and service to our nation. Since they took over from the Old Guard Ministers, Singapore has continued to grow and prosper. They deserve the salary increases throughout their years in office, although a few, I am sure, were a bit embarrassed by the last January increment which puts them into the $1/2 million annual salary mark.

Then what about our future leaders? If the January revision of $1/2 million needs a further revision to $800,000 to get people into Cabinet, then the question asked will be what sort of future leaders will we get. During a Deepavali visit yesterday, someone passed this remark, "I will now have to look at a Minister more carefully than before." There is a hidden message in this remark. The big question mark is whether a person in Cabinet is solely for the money will hang over his head and a negative effect would be that good people, even those earning reasonably high salaries, will think twice about joining politics. The big worry is that we might actually attract the wrong sort of people who would try to become Ministers solely for the money and people who regard Ministership as a career choice rather than a service to the country. Our only safeguard is our selection system which is not practised stringently in other parties.

Finally, Mr Speaker, Sir, governing Singapore in future is not going to be easy. The kind of Singaporeans we are trying to nurture depends on what value system we imbibe in them in schools and at home. If money is the yardstick to reward and measure success and especially if Parliament appears to take the lead, then where do we go from here?

There will be a political price to pay for this exercise. I hope that Singaporeans will be persuaded by the Prime Minister and the Senior Minister that this pay package is but a small price to pay for good, clean and honest Government. 1.52 pm

Mr K. Shanmugam (Sembawang GRC): Sir, I speak quite strongly in support of the central argument advanced in the White Paper - that the public sector salaries should not fall behind private sector salaries.

This White Paper has generated some adverse reaction from a cross-section of the public. We have to consider whether these reactions are justified. As I see it, the criticisms fall into two broad categories:

(1) Some disagree with the principle of linking public sector salaries to private sector salaries; and

(2) There have been many questions raised on the methodology used in the White Paper to arrive at the figures.

Taking the first criticism, we heard President Kennedy quoted. We heard Assoc. Prof. Woon's question as to whether it is right for senior public officers to compare themselves with the best in the private sector. The question of sacrifice, that of public office being a calling, were all mentioned. Then there was the emotive speech of Dr Soin today.

With respect, I think that the real issue in this debate has not been focused upon. The point is not that money is sought to be used as a carrot to entice unwilling politicians. Neither is it to encourage greed.

The point is this. Let us take the civil service first. Take a bright young graduate. He has a series of career options - in the private sector and the public sector. What are the factors that that person will consider? He will consider which job suits him best. Where he can achieve most. And where his prospects are the brightest, including monetary prospects.

If one career pays much less than the others, then it is likely that he will not choose that career. Let us be honest and not be hypocritical. When people make career choices, they will certainly consider the respective remunerations. If you want the best, you have to pay the best.

Now, let us turn to Ministers. It is accepted that public office is a calling: It requires a person with interest in society and a desire to contribute, to change things, and such a person must be exceptionally bright. The point again is this: when one considers accepting public office, the only questions you want him to ask himself are:

(1) Can I contribute?

(2) Am I good enough?

(3) Am I cut out for this job?

(4) Do I have the motivation?

You do not want him to ask one more question, ie, can I afford it?

If he has to ask that question, then in general, only two types of persons will say yes: those who are wealthy enough to accept public office and those who will not earn these salaries outside anyway. Do we want our system to be turned into that sort of system? What I say is, of course, an admission that perhaps people do not come forward to serve merely out of idealism. But I say let us be practical. In the absence of great causes and in the context where we have peace, prosperity and progress, let us try and understand how people will react. I say that if there is a substantial monetary sacrifice, people will not choose a public sector career. If the potential Minister is of the highest calibre, then he would either already be earning very well or will have the potential to do so. I say that such a person in general might not be willing to serve in public office if there is a substantial financial sacrifice involved in the move. It must be as seamless as far as the financial aspects are concerned for the person to consider that move. Money should not be an attraction. But neither should it be an impediment. That is the real point.

I disagree with Dr Soin that the White Paper suggests that the payment of adequate salaries will remove the problem of attracting talents. I do not think the White Paper suggests that. I think the White Paper simply seeks to remove one possible obstacle for people to come in and serve. The other problems of serving in public office will remain and it is for the Prime Minister to persuade people to forget about those obstacles and still come in and serve.

I also disagree with Dr Soin that managing success is a great challenge and I would suggest to her, off the top of my head, that there was a study in America about how people consider various professions. Third from the bottom were journalists, second from the bottom were politicians, and at the bottom were lawyers. But be that as it may, it is a fact of modern life that politics is not seen as a great calling. We have to accept that. When we talk about power, perks and public office, we have to bear in mind how the public perceives political office and we should not, in my submission, place too much emphasis on the fact that people would be willing to sacrifice in the absence of great causes.

Again, in contrast to my hon. friend, Prof. Woon, I would certainly advocate comparing with the best in the private sector because that is the market that you are hoping to tap. Let us ask ourselves: in the strata of society, where do you want our Ministers to be? Should they be as good, as competent as the top private sector professionals? The answer must be yes. If that is so, then why quibble about paying them top private sector salaries? Why do we insist on financial sacrifice? What is the rationale for insisting on financial sacrifice? Everyone comes up and says, "Sacrifice". But why? What is the need for that financial sacrifice? Why should we insist on people making that sacrifice?

As I understand Dr Soin's argument, the only way in which a person can show his commitment to public service is to make such a financial sacrifice and if that is the argument, I disagree with it.

I should deal quickly with two subsidiary arguments in this context. The first was Mr Ling How Doong's point that the present Ministers do not deserve such salaries because they were not earning these salaries before they entered public service. I think again Mr Ling misses the issue in this debate. The issue is one of principle, without reference to individual Ministers. Let us look at the office. What status do you want the Ministerial office to have? What kind of men and women do you hope to have? In the hierarchy of jobs, do we accept that the post of a Minister must rank with that of the first-class jobs outside? I do not hear anyone speak against that point. If so, then surely we must not quibble about paying first-class salaries. If Mr Ling is unhappy with the worth or performance of any individual Minister, or team of Ministers, as he might want to do, given that he is the Leader of the Opposition, he should raise that for debate. The question of what you should pay for the office is different from the question of whether the incumbent is worthy of that office. As I said, if any particular Minister is incompetent, that can be the subject matter of debate. It is not an argument against paying Ministers well.

The second subsidiary argument I wish to deal with is Prof. Woon's point about people in the public sector possibly being content to climb up to a certain point in the tree and then relax comfortably on the branch because they cannot be kicked out. I disagree that that is at all an useful analogy in the context of the present debate. Bear in mind that we are only dealing with Ministers and the creme de la creme of the civil service - the movers and the shakers. Let us take the Ministers first. I would be disappointed if the Prime Minister does not kick out any Minister who is content to sit on a branch. Ministers perform in public and if they are incompetent, there is no place to hide. Such a Minister would be a liability in any Cabinet.

Let us next take the civil servants. Those who are content to sit on a branch will, in all likelihood, be sent to a department where they can watch trees grow slowly. They will not be the movers and shakers to whom these salary scales and these promotional prospects apply. They will not be Superscale G officers at the age of 32 and eventual Permanent Secretaries. We are talking about a very small nucleus of people, the Philip Yeos and Kishore Mahbubhanis - people who can represent Singapore at the United Nations at the age of 32, and hold their own, and do us proud. We are not referring, I think, even to the entire Administrative Service because I would assume that the Administrative Service officers progress at different rates. We are referring to the very best, perhaps 10, 20, 30. Let us get the context right. Of course, I fully accept that there should be performance monitoring. Mr Bernard Chen has made the valid point that if you want private sector salaries, then make sure that you have a system which makes you fully accountable for your performance. That is correct. But again it is not an argument against good officers getting well paid.

Now, let me turn to the second set of criticisms. The methodology in the White Paper has raised some questions. I have considerable reservations on the methodology. First, among the data which positively invites comment is Table 4 which sets out the 15P income in six professions. If we take the statistic for age 30, and look at the six professions, at that stage, it is likely that the lawyers will be among the highest earners. At present, five years after being called, some will make partners - and the present practice is that they would not earn $150,000 in major firms - which generally pay the best. The top firms are the obvious comparison because that is where a bright young lawyer will end up if he does not join the Government. Accountants take about nine years to make partners and they would not earn $150,000 after five years. Bankers in their 30s will only be making their way up. I suspect, therefore, that the figures in Table 4 are not reflective of the general position and may well be distorted by special factors.

There are likely to be young professionals who are well paid because they join their father's firm. I know of some who earned $100,000 in their first year and it will not be reflected in the income tax return that they earned that because of the special relationship. I can well believe that, in Singapore, you can find 15 such persons who earn such extraordinary salaries at the age of 30 because of special factors. But that cannot be a valid benchmark. The children of the business owner are not a valid benchmark on what you pay the best in the public sector. Their earning capacity is inherited and not earned. The public sector cannot use those examples for benchmarking. The principle should be to pay what the brightest might earn outside, excluding inherited salaries.

By all means, benchmark at 15P or even higher because the Administrative Service must have the best. But be more realistic about what young professionals get paid outside. The grass always looks greener on the other side. The bright young civil servant who possibly prepared this part of the White Paper has not, I would argue, done his homework. A consultancy firm can easily advise on the earning prospects of such professionals, when special factors are excluded. And I repeat, IRAS data will not always be a valid guide.

The second question I have relates to the White Paper's explanation on pensions. The private sector earners identified at Table 2 will not earn pensions. Senior public officers generally earn handsome pensions. That makes a considerable difference. It is not at all clear to me that that has been adequately considered by the White Paper. The White Paper deals with this issue by pointing out a number of factors. Firstly, it says that pensionable officers have lower CPF. But of the six professions identified, three - lawyers, accountants and engineers who are partners - will not get any CPF. In any event, when we are considering total annual emoluments, CPF should not be a factor. You must consider like with like, total emoluments against total emoluments.

Secondly, the White Paper says that the private sector has perks which are not fully taxed. With respect, that argument does not wash at all. What are these perks? And if they are at all monetarily significant, I have no doubt that our very efficient IRAS will ensure that they are taxed. People at this income level - and we are talking about 24 individuals - will not dare to have undeclared perks with substantial money value.

The third argument that has been advanced by the White Paper, not to consider the pensions as relevant, is that because of the two-year lag in computing data, the public sector employees might earn about 15-20% less than the private sector. That assumes that year on year the private sector salaries increase. That is open to question. The White Paper itself recognises that in 1991 and 1992, there was in fact a drop in salaries in the private sector. And I can go on, Sir. There are many, many things that the White Paper appears to have overlooked on this point. But I think the position is simple. The White Paper cannot dismiss the pension as breezily as it does. If the public and private sector salaries are to be matched, and I agree that they should be matched, then the payment of pension cannot be justified. It has to go. The idea pension was relevant in the days when the public sector offered different things from the private sector, salaries were different, they offered security. And now, if you are good enough to be a senior civil servant or a Minister, when you retire, you ought to be able to walk into any job in the private sector. There is no need for that added security. It cannot be justified in principle.

The third comment I wish to make is that Table 2 sets out the salaries of persons at the very peak of their career. They would on average have taken between 20 and 30 years to reach this position. They will not stay at that income level for very long. They will earn these salaries for a few years before retiring. It appears questionable, in principle, to take the earning capacity of such persons and apply it perhaps to a Minister in his late 30s or early 40s. A more accurate approach that I suggest would be to follow the principle applied to the civil service, which is to benchmark by reference to age. We can predict what very successful professionals from the private sector will earn at the different age groups. The Ministers can then be paid by reference to the best in their age group. Of course, just as in the private sector, a degree of flexibility can be maintained to promote some beyond their age group bracket. An exceptional Minister may get the peak salaries even at a young age, just like in a rare case you can get a person in his 30s becoming a Chief Executive Officer of a large organisation.

I had also originally wished to comment on the danger of computing stock options and just choosing 24 highest individual earners in each year without reference to possible distorting factors. However, that point has been made by Dr Lee more clearly and lucidly than I could have hoped to have. I associate myself with her comments.

I say that I am not at all satisfied that the White Paper has accurately assessed the private sector incomes and there is a risk that, on the present benchmarking, the public sector salaries would well be ahead of private sector salaries. That might be difficult to justify in principle. I would also give notice that I would argue that this point about market value should also be applied all the way down to people below the Administrative Service and the Ministers. It should apply all the way down to the daily rated workers and, in due course, I hope to raise that.

I wish to make a further point. Public officers are trustees of public funds. Parliament should define the principles governing the principle of payment and we are discussing that now. If the present principle foresees future adjustments being made periodically by application of the accepted principles, I would suggest that that should be done for future adjustments by an independent statutory body which is not part of the Executive, the PSC, for example. I say that because, as a matter of principle, it does not appear to me to be right that such decisions should be made by the executive arm of the Government, because the decision makers will have a direct stake in the decision. Even if they decide perfectly fairly, there will always be a question mark over their decisions and, as can be seen, it is all a question of numbers and there can be large variations on the adjustments. I would suggest that it is best to leave the actual adjustments to a body independent of the Government.

Sir, with these comments, I end by supporting the principles set out in the White Paper.

Dr Kanwaljit Soin: Point of clarification, Mr Speaker, Sir. I would like to clarify what Mr Shanmugam said about what I said. I did not ask Ministers to make a financial sacrifice. What I said was that the present batch of leaders only agreed to come in because of the feeling of service to the nation and money was not their consideration. Also, presently, Ministers are being paid reasonably well, so there is no great financial sacrifice. Then I went on to talk about how make-up pay will compensate for the financial sacrifice of private sector people becoming politicians.

Mr Kenneth Chen Koon Lap (Hong Kah GRC): Sir, I support the motion put forward by the Prime Minister.

Mr Speaker, Sir, so far, the debate on the White Paper, both in this House and outside this House, has been centred mainly on the quantum of pay of Ministers and senior civil servants. It is being looked at in a very narrow perspective. The real issue before us here is whether we accept the objective of the White Paper in seeking to entrench a philosophy into our political system that emphasises that Singapore should be governed by the most capable and talented individuals available. This philosophy has ensured the continued prosperity and stability of Singapore since independence, and I do not think anyone of us should have any problem in reconciling with the proposal that this handful of selected people be remunerated commensurate with the best or near the best of the top private sector earners.

Big corporations, like banks, manufacturing companies, spare no effort in sourcing the best talents to fill their senior posts. Companies, like Coca Cola and Walt Disney, pay millions of dollars to the Chairman, CEO and executives, because they know that the performance and survival of these organisations will depend on the performance of these few. Their success or failure can affect thousands of employees and their dependants. Singapore is like a big corporation, except that its performance would affect the entire population. It is obvious that governing Singapore in terms of responsibility and capability is much more demanding than the management of any of these large corporations.

Let us be clear that when we put this system in place, it is to fulfil a long-term objective. It is not targeted at the present Government in power or to any of the individuals who are now holding the posts of Ministers or senior civil servants. It applies to any future government in power, be it the PAP government or any other political parties who may one day be in power in place of the PAP. Therefore, we should examine the contents of the White Paper objectively as a means to ensure that the best of Singapore talent be placed in positions to govern Singapore.

One may ask: what if the elected government does not fulfil the required standard expected of its people? In other words, what if persons with lesser capabilities somehow get into the position of Minister or top civil servant? In such a case, our political system will provide a safety valve because the people of Singapore can ultimately exercise their rights by voting these people out of government.

Some speakers, notably the Opposition Members, expound that those who enter politics should not be for monetary reasons, that they are expected to make sacrifice as they are supposed to serve the people and the nation. In other words, to be altruistic. I totally agree that to take up public service, one should be totally prepared to make sacrifice as it is a sense of duty and a sense of commitment that drive a person to take up public service. But it is very difficult to define what is the ultimate of one's sacrifice. To me, one of the greatest sacrifices a person can make is perhaps giving up totally one's personal freedom and privacy. As we all know, the Prime Minister and all the Ministers cannot possibly enjoy much freedom and privacy. They are under public scrutiny almost 24 hours a day, except maybe in the privacy of their own home. This loss of personal freedom and privacy cannot be measured by any amount of monetary gain.

I realise this because of my very long experience in the private sector and I can see the difference. I can feel the difference very acutely when I entered public service.

Mr Ling and Mr Chiam, for example, have again brought up the comparison of how much the Ministers and Prime Ministers in other countries such as Britain, Australia, United States and New Zealand get. Looking at the state of political situation there, I wonder whether Mr Ling and Mr Chiam know that by bringing this comparison up, they are actually speaking for the motion, instead of against it.

Last week, it was reported in the Straits Times that in the run up to the election of the House of Representatives in the US, candidates spend an average of US$2 million for their campaigns. Some may even spend more. It takes a very naive person to believe that US Congressmen and Senators really depend on their official pay-cheque for their livelihood.

So, Mr Speaker, Sir, my conclusion is that if we agree that Singapore should be governed by the best among the best, then we should not quibble about the quantum of remuneration being paid to the Ministers or the senior civil servants. For despite all the cost and national sacrifice and how one should put country before self, most dedicated and capable young men and women, when they make a career choice, one of the main considerations, not the only consideration, will still be how well they will be remunerated, whether it is commensurate with their capabilities and responsibilities. The best will always expect the most. It has nothing to do with greed. It is merely a fact of life.

Just now, Dr Soin said that money should not be a consideration, that taking up public office is a calling. But most top professions contain a certain element of calling, not the least is the medical profession. I would like to think that most young men take up the medical profession not for the monetary gain but for the higher ideal of serving the society and humanity. Then can we ask them: when they become doctors and surgeons, can they cap their earnings? Can we ask the surgeon, after a few operations per month, to say, "OK. That's enough. I've earned enough," and proceed to operate free of charge for the rest of the month? I think it is unfair.

The issue here is: how do we ensure that this group of chosen people is really the best in Singapore? And how do we choose honest, capable and dedicated future leaders? If we can identify them and they are willing to serve, then the question of remuneration is one of the many considerations. Even at the highest scale, it is a very small price for each of our Singaporeans to pay, as they will always be better off by a system which ensures the future stability and prosperity of Singapore.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 2.5 pm.

Sitting accordingly suspended at 2.22 pm to 2.50 pm. Sitting resumed at 2.50 pm

[Mr Speaker in the Chair]

Debate resumed.

The Prime Minister (Mr Goh Chok Tong): Mr Speaker, Sir, I think it was a stroke of good luck that in 1959 Mr Lee and the PAP won the elections. Had Mr Lee and his colleagues not been in charge of Singapore, I do not believe we will be discussing the White Paper today. It would have been a very different Singapore. The best men and women of that era came forward to stand for elections to lead Singapore. They had a mission: to fight for independence, to battle with the communists, the communalists and then to build Singapore from scratch when Singapore separated from Malaysia.

Can we recreate those circumstances and produce similar men and women who would respond to this noble calling of politics? I start on the assumption that that period is over. I hope it does not come again, because if it comes again, it means we would require a very different set of people to volunteer, to fight, to deal with crisis, with big problems, to sacrifice pay, forget all about the benchmark and so on. I hope we do not have to repeat that period. So I start on the assumption that Singapore is going to be successful. That is my job. That is the job of my colleagues. If we succeed in keeping Singapore going, then how do we get people to come in under very different circumstances?

I never joined the PAP before I became a Member of Parliament. I knew very little about the PAP. I attended election rallies. I listened to Lee Kuan Yew speaking at election rallies at Pasir Panjang. I followed what he spoke in the newspapers and listened to the radio. But beyond that, there was no special interest in joining the PAP. I was not in the CCC. I was not active in helping the PAP through their grassroots organisations. I was concentrating on my career when I was a young man in the public service, and later on in Neptune Orient Lines.

So I was surprised, when in 1976, the late Hon Sui Sen called me up to his office, and asked me whether I would consider standing for election. My response at that time was: give me three days to think over. At the end of the third day, I dropped him a note. I said, "Yes, I will come in."

My decision was based on a very simple personal factor. I went through the upper secondary school and the university on a bursary. Without a bursary, I would not have been able to go to university. So there was no question whatsoever. I just felt that I should say yes, and serve. Of course, he explained to me why they were looking for people like me, and not from within the party.

When the Senior Minister, at that time Prime Minister, was looking for a successor, I was one of those considered by my colleagues. But when I was selected by my colleagues, there were a couple of us who met in Tony Tan's house and they decided on me to be their leader, I did not jump for joy. I accepted the responsibility. That was in 1984. Even then, I was still not sure whether I was the best person to be Prime Minister. It took me some two years, and it was only in 1986 that I decided to say yes. Nobody else wanted to do it or could do it from my cohort of colleagues, and I felt that I should therefore concentrate on doing the job.

At the 1988 general election, I was expected to take over the Prime Ministership from Lee Kuan Yew. Some of my colleagues were a little disappointed that I did not take over right away. They thought a change was good, but I did not. I did not feel fully confident enough to take over. So I took my time. It was only in 1990 that I felt that I could do this job competently. Then Mr Lee and I agreed that he should step down by a certain date, and I decided to take over in November 1990.

When I joined politics, did I think of money? I did not know what an MP's allowance was, what a Minister of State's pay would be or whether I would be appointed Minister of State or Senior Minister of State. It was entirely up to Lee Kuan Yew or the Government or the Cabinet. But I knew what I had to give up. I gave up a chauffeur-driven company car, a Mercedes. I gave up a company house, a two-storey detached house on 10,000 square feet of land. I had never negotiated over pay. In the civil service that is not possible, or when I was working in the private sector, and I am not going to negotiate over my own pay now. This is the most difficult part in this exercise where I am here to move the motion on the White Paper to pay the civil servants and Ministers better so that they can keep Singapore going with good people. The delicate part is the Prime Minister's pay gets rolled into one with this. So it would come across that I am also pushing for the pay of the Prime Minister, that is, for myself.

I intend to take out the Prime Minister's pay or the benchmark in the White Paper and ask an independent panel to review it separately. Then I can argue with moral authority what the Ministers and civil servants should be paid. It does not matter what the panel would decide. 10% less, 20% less, 30% less, it does not matter. What I want is the moral authority to be able to make a case for the civil service and for future Ministers.

The White Paper was worked on mainly by the Deputy Prime Minister. Of course, he was assisted by a team of civil servants. I have tasked him with revamping the personnel administration in the civil service. As you know, the personnel management in the civil service was not the best in the country. You have the Public Service Commission, a central body, which recruits, assesses, promotes officers, not just senior officers, but all officers in the civil service, the whole range of them. It was too centralised. The Ministries and departments which want to have the officers did not have the authority to recruit, nor the authority to promote, nor the authority to censure. That system worked for many years but it was clear to many of us that that system was not working and would not work in the future. So I asked the Deputy Prime Minister to look into how we can change the whole system which would involve changes also to the Constitution. The changes have been announced in this House, and the Personnel Boards are in place.

The discussion on the White Paper must, therefore, be seen in this light against its wider purpose of changing the whole system. I know that the system must be changed, not just from my experience as an employee in a private sector company, but as a young man in the civil service. As a young man, after working for about a year in the civil service, I applied for a job in the private sector. Money does not mean much to me now. My children have grown up. My wife has her own independent means of income. My needs are much less now. But as a young man, I can tell you that money was important.

I started work as an Administrative Officer, $830 per month. I was planning to get married. I looked up the advertisements, I saw an advertisement by Shell company which offered the starting pay of $1,100, and that was a big increase for a young man about to get married. So I applied for the job.

I was surprised at the system of interview. For the public sector service, I was called up before the Public Service Commission, just one short interview, lasting 15 minutes and the job was mine, partly because I think I was on bond. But in Shell, I was first interviewed by the Personnel Manager. After a few days, I was called up, interviewed by somebody else again. I had to sit for an IQ test, written comprehension test, and had to write an essay on a subject given to me on the spot within a certain time limit. Then I was interviewed by the prospective departmental managers who had an interest in recruiting new staff - Finance and the Supply Departments - and thereafter invited to a lunch, given by the Chairman, where there were a few other senior managers to chat you up, to assess your social etiquette, your personal behaviour. At that time, I knew nothing of HAIR qualities, helicopter qualities, sense of imagination, sense of reality, and so on. But that was how Shell, in retrospect, was assessing its candidates.

Now that we are in charge of the civil service, when DPM looked into the problem and told me that the system must be changed, I agreed readily. The system of Personnel Boards is now in place, but will that alone do the trick? Can we recruit the people whom we want into the civil service, just by changing the personnel management system? I think it will go a long way, but it will not be sufficient. At the end of the day, salary is still the key factor. I agree with Kanwaljit Soin that there are other factors involved, and we should look into these factors. We should attract people to join the service and, very importantly, to retain them. But at the end of day, my own belief is salaries play a big part for a young man and a young woman, just as it was for me when I was about to get married.

So the Senior Minister, when he was Prime Minister, started the process. He pegged the salaries of the Administrative Officers to the private sector's equivalent, 80% of the private sector pay. But as he explained, in practice, the process was about three to four years behind time. So, in effect, the percentage was much lower than the 80% which he wanted.

When DPM looked at the problem he recommended that we aim higher, peg the salaries to the top few hundred salary earners in the private sector. It is not just a question of upping salaries. It is an entirely new way of looking at things. It is a total philosophical change.

We start on the basis of this question: what kind of people for Ministers and Administrative Service? What kind of people do you want to be in Government, to be running your Administrative Service, and to be in Cabinet? Do we decide on the salaries first without worrying about private sector pay and then hope to attract the best people to join the Administrative Service, which was the previous system? Or do we decide on the kind of people we must have for the Administrative Service or Cabinet and then find out what salaries these people would be capable of earning at a certain point of their career, and then use equivalent salaries to get them to come in? And that is the approach which we have opted for.

It is a new way of looking at things - decide first on the kind of people you must have in Government and in the Administrative Service, and then design the salary structure to get these people to come in. Not the other way round, have a salary structure, hoping people will join us.

For the Administrative Service, we want people who can be amongst the top 15 salary earners in the cohort at age 32. People who will do well in the private sector, who will do well in the public sector, whom we think by the age of 32, they will be so successful that they will be earning a certain income. So those are the people whom we want, the top 15 salary earners for that age cohort of 32.

For Ministers, we want people who have the ability to rank amongst the top 100 salary earners in Singapore regardless of age. So we are aiming for a very special group of people to come in. We are not saying that this is the salary, please come in. That can be a wrong way of getting people to come in. We say, who are the people out there who either earn that much, or can earn that much in time to come. And they are the people who must have certain qualities in them and the first quality must be competence, ability to make the company succeed or to be successful in the profession. And this is the point which Shanmugam grasped very clearly and it requires almost the last speaker to see this point. This is the central issue of the White Paper - the philosophical change.

Also, more importantly, as Shanmugam noted, we want to let our young students know at a very young age what are their career options. At the moment, for many young people, the Administrative Service is not a career option. And again, I speak from personal experience. When I graduated, despite the bond which I was on, I wanted a transfer to the university, to be a lecturer, to do my PhD. I never knew that an Administrative Service existed. So when I was called up by the PSC and offered this job, I asked, "What's that? Administrative Officer?" I had no idea. Lecturer, I know what it was all about. Doctor, I know; lawyer, I know. But Administrative Officer, I had no idea. In a young man's mind, the Administrative Service was blotted out.

What we want to do now is to change the whole perception of the Administrative Service. We know how much doctors will earn, how much lawyers will earn. We are telling these young people that before they decide on their courses in the university, whether it is law, medicine, architecture or engineering, there is also a career which pays very well in the Government service which he ought to consider. And you could see the effect of publishing data. When the Senior Minister, some years ago, published the data on what lawyers earned, there was a palpable shift towards the Law Faculty. I think today, Prof. Walter Woon and the Law Faculty would have no trouble in recruiting bright young people to the Law Faculty. But that was not so years ago.

So if parents and students know the earnings of various professions, including the civil service and the Administrative Service, they can then make informed choices at a young age before it is too late. Because once you have done law, you have done engineering, you have done medicine, architecture, it is very unlikely that bright minds, having gone through those courses, will consider joining the Government as an Administrative Officer. We have lost them. So we are going back to the 'A' levels, maybe even way before the 'A' levels, to give these young people an option, and we need some people to do the right courses to join the civil service to help us to run this place.

Ministers up to now come mainly from the same pool of people - Administrative Service, SAF. Even if they do not come from within these two services but from the private sector, they would also come from within the same talent pool of people we are looking for. There is a complication in deciding on what we should pay the Ministers.

I can tell you that the Ministers here would not mind taking a pay cut. But if we peg the Ministers' salaries lower because of this sense of public duty which we have, we would then suppress the salaries of the Administrative Officers, the Judges, the engineers, and the other senior officers. Or do you say, "Doesn't matter. Let the Administrative Officers be paid much better than a Minister." They can do that for a few outstanding Administrative Officers, as indeed we have now. Several Administrative Officers are paid more than our Ministers. But if we suppress the Ministers' wages, that must mean suppressing generally the salaries of the civil service and the Judiciary. If we do not do that and we allow the civil service to pay them a market wage and we identify a top civil servant whom we want to be a Minister, can we persuade that civil servant to give up one-third of his pay to be a Minister? If you can do it, will you please do it for me? I do not think in a real world, that is possible. 5% or 10%, they will sacrifice. 20% or 30%, to give up a job as Permanent Secretary, Staff Grade I, to be a Minister and paid a Superscale B, I do not think that is on.

So when we adjust the salaries for the public service, in particular, the salaries for the Administrative Service, we also look at the same time at the salaries of Ministers. The two are linked together.

I agreed with the recommendation of DPM on the benchmark of civil servants. He saw me at the various stages of the White Paper. For the bright young civil servants, aged 32, pegging that salary to the 15th person salary earners in the whole of Singapore, no problem, I agreed. But I decided on the benchmark for Ministers. DPM gave me several points to choose from. We can peg it at 50% of the top four from these six professions, 60% or two-thirds. I decided on two-thirds. To repeat, 50%, 60% or two-thirds. I decided on two-thirds because I want to aim at a particular group of talent at the top.

It is a matter of judgment. I think in this case, there is no science to tell me that two-thirds is the right figure, but I feel that that would be about the right level. If it proves too high and in two years' time we get a flood of applicants, good ones, to be Ministers, I can lower the salary. But if it proves too low, of course, we look at other factors too, well, we may have to come back and revise salaries further. I take the point that salaries are not the only factor in our difficulty in getting Ministers. We have to look at other factors.

What I ask for today is to give the formula a try. We will try it for five years and then we review the formula. The suggestions made by MPs can be taken into account when we review the formula.

I intend to set up a committee to verify the figures and calculations of the Inland Revenue Authority. Some people have expressed surprise that the figures are so high. I think it is useful to have an independent panel to look at the calculations to verify the figures, and then to have the figures published every year as they appear in the White Paper.

I propose that the chairman of the panel be somebody from the Public Service Commission and then we should have the Auditor-General on the panel plus two or three others from the private sector. I will look for suitable people from the private sector to be on the panel.

This suggestion is similar to what Mrs Yu-Foo Yee Shoon and Encik Othman Haron Eusofe have suggested, that there should be a separate panel to look at all this. But the panel should not be deciding on the salaries of civil servants and Ministers, as somebody suggested. I think that will be wrong. However difficult the political problem may be, we, as the Executive, in the end must make the decision. In companies, they do not get an outsider to decide on how much directors or the CEO should be paid. Somebody from within the company must decide. They may do surveys. They may hire a consultant to advise them. But in the end, the decision must be taken from within the company. Likewise, I would not be in favour of setting up a commission to decide on the pay of civil servants and Ministers. It may be delicate, but we have to decide and we will come to Parliament from time to time to justify whatever changes to the formula there may be, or whatever pay the Ministers should be getting.

The confidentiality of income tax returns will be maintained when we have this panel to examine the documents. The names will be blanked out. The committee will be sworn to secrecy and the individual taxpayer's name will not be revealed. It will be done in a manner that nobody knows who is earning what. The figures can be examined without the names.

The benchmarks are not for all time. The panel will give us its comments and we will take into account MPs' comments and later on, revise the formula, when we have more experience in working the system. I shall also ask this committee to review the benchmark for the Prime Minister.

On the question of benchmarking, intellectually and in principle, I do not think anyone can fault the proposal to benchmark pay to private sector earnings. I have listened to the arguments but I do not think you can fault it intellectually or in principle. What you can disagree on is how to peg, where to peg. Is it the top four, is it the top 10, is it the fifth percentile, is it the tenth percentile? The details can be argued over. But when you are deciding on pay, it must be done objectively. You have got to decide in relation to something. In relation to the public sector itself, it makes no sense. It must be related to something outside and that is the private sector.

Benchmarking is linked to actual pay in the private sector, of comparable job size, responsibility, requiring people of similar aptitude and talent. Yes, in benchmarking, we should take into account the different characters of the public sector and the private sector - the risk/reward ratio, the security in the civil service which is more than that in the private sector and the nature of the job itself. But ultimately, you still got to have the right pegging, because civil servants can still vote with their feet.

Dr Lee Tsao Yuan and a few others have commented on the formula that there is this upward bias in the formula. Yes, the criticism is valid. There is this upward bias in the formula when you choose the top four of the six professions. Because year after year, you are choosing the top four. Individuals might have peaked and they might have gone down in their earnings. But year after year, you are choosing the best of the whole lot.

But there are other biases in the benchmark which weigh the figures down. For example, if you take one profession like lawyers, there are many lawyers earning over $1 million, even young ones. In 1993, over 26 lawyers earned more than $1 million. Three of them were in the age group of 36-40. I do not know whether these three lawyers were working in their father's firm and therefore given huge pay, because we never looked at their names. So we would not know who is earning what. But you are taking only the top two, and there are more lawyers earning over a million dollars than, say, CEOs of MNCs, so there is this downward bias.

Also, I would make the argument that the Ministers should be on top of the job. While others will peak and go off, if the same Minister is on the job, he should be amongst the top four all the time. If his performance goes down, his energy level goes down, then, as one MP pointed out, that is the time for us to consider easing him out in as gentle a manner as we can. So it is still right to argue that whilst there is the upward bias, Ministers are expected to be amongst the top, year after year.

There is also the criticism that the benchmark is not stable because of year to year variations as a result of bonuses, share options. Again, the criticism is valid. It is not as stable as you want it to be. But the committee that did the benchmarking had calculated the benchmarks over the last five years. They looked back at figures of the last five years and they looked all right. But I concede that this may not be so in the future. Again, we will fine-tune and incorporate suggestions and if there is a defect in the formula because of this instability, we will review it. Even as we revise the salaries in accordance with the formula, we will be exercising discretion. If they are spiked upwards, we will be quite careful. We are not going to link the salaries of the civil servants and the Ministers just because of a spike. We will moderate.

What about other ways of deciding on Ministers' pay? I think Mr Chiam has suggested that we go on a decent lifestyle basis. I think he was supported, maybe innocently, by Assoc. Prof. Walter Woon. But a decent lifestyle basis is subjective. What is a decent lifestyle? Do you provide for children's education in universities abroad? How much do you have to put aside for old age? And why should the Minister have such a decent lifestyle when the bulk of the population live in 4-5 room flats and some in 2-3 room flats? Why can the people not have the same lifestyle as the Ministers? So this subjective element will be difficult to use in deciding on how much a Minister should be paid. And I know of no company in Singapore - perhaps there are such state companies in Communist countries - which pays its employees on a decent lifestyle basis. In Communist countries where they pay employees in accordance with need, maybe they pay in accordance with decent lifestyle. But that decent lifestyle is at a very low level. For market economies, it is payment in accordance with the worth of a person, how much does he contribute, what is his ability, what is his performance.

But even on a subjective basis, Mr Chiam's calculation is not far off the current pay of the Ministers. For the Minister, Mr Chiam thinks the Minister deserves $51,000 a month for a decent lifestyle. For the Prime Minister, $63,750. Let us round it off to $64,000. I was not sure whether this monthly pay should be multiplied by 12 or whether we should add in the 13th month payment, variable bonuses and so on.

Mr Chiam See Tong: Multiply by 12.

The Prime Minister: I checked with Mr Chiam outside and he told me that I could add in variable bonuses. I checked with him outside because I was busy taking down notes over here.

Mr Chiam See Tong: Income tax.

The Prime Minister: Never mind. Let us say that we multiply it by 12, I think it is not too far off from the current salaries of the Ministers. For the PM, multiply by 12, it is about two-thirds of what the PM is getting.

Mr Chiam See Tong: Will you take it?

The Prime Minister: Mr Chiam asked whether I would take it. If I can be sure that Mr Chiam will be around after the next elections, for the PM I am inclined to take it. Because then Mr Chiam cannot go around and say that what the PM earns in one day, a worker will take 30 days to earn. To the layman, $700,000 is a lot of money. Right? So if Mr Chiam goes around saying in future elections that the PM and the Ministers earn that much, I will say that Mr Chiam recommends it.

Mr Chiam See Tong: Mr Prime Minister, then I can keep my mouth shut!

The Prime Minister: Then there was a suggestion that we should use make-up pay for Ministers. I find a contradiction in Dr Kanwaljit Soin's argument. She argued that we should appoint Ministers, identify the right people outside, appoint them to be Ministers and pay them make-up pay in order that these Ministers will not suffer any financial loss. If she is prepared to pay nominated Ministers their private sector salaries without discount, why does she grudge elected Ministers the same salary if the elected Minister is just as good as the nominated Minister? I do not think they are doing the same job. I think an elected Minister does a bigger job because he has a constituency to look after and he has to be able to mobilise people. But technically, professionally, the elected Minister must be as good as the nominated Minister.

Dr Kanwaljit Soin: May I make a clarification, please, Sir? I was just quoting the Prime Minister, Sir, when he spoke on 23rd March 1989 when he said that there was a provision to get people as Ministers. So I said, with that provision, why does he use that as a rationale for increasing the Ministers' pay altogether? I was not just suggesting nominated Ministers. I was just quoting what he said in March 1989 when he suggested that this make-up pay was to compensate people who came in from the private sector and inducted into political office, and with this make-up pay they would not have to suffer a financial sacrifice.

The Prime Minister: Thank you. The rationale behind the make-up pay is actually 100% benchmarking. When I get somebody from the private sector to be in the Government, I use 100% benchmarking. So for Ministers, I am looking at what a person of equivalent talent and with an equivalent job size can earn outside. So we are now talking about this revision which is actually in a way giving him make-up pay. If it makes it easier for her, I can use a certain make-up pay, instead of using the formula to revise. But the principle is the same. You are actually looking at what the private sector pay is and you make up for the loss of earnings for the Ministers.

Yet another method suggested by Opposition MPs is to look at the earnings of Ministers elsewhere. Mr Ling suggested that we should look at what ASEAN Ministers and Prime Ministers or Presidents are paid. Mr Chiam circulated a table of what leaders are paid in some developed countries. So I take it that the argument is that we should look at the pay of other Ministers elsewhere and then pay our Ministers accordingly. I think such comparison is not meaningful on four counts.

The first reason is that the full costs of Government to the country are not captured. You cannot use pay alone, you have to go for the full costs of Government - pay, plus perks, plus the number of political appointees that you may have for the Government. For example, President Clinton has his Air Force One and his Camp David. I understand that Air Force One costs something like US$18 million a year to operate. Of course, it is not just a simple passenger aircraft. It is a communications centre. It has got all kinds of sophisticated devices in it, but it costs US$18 million a year just to operate Air Force One.

I think it is extremely risky to compare the pay of Singapore leaders with the pay of leaders in developing countries. I know that the Senior Minister was paid maybe less than one-hundredth of the pay of President Marcos, but I do not think Marcos was just 100 times richer than Lee Kuan Yew. I think he was much wealthier.

The second objection to this comparison is that Prime Ministers and Ministers are not tradable. We are not like commodities which can be exchanged on the international market. John Major, however willing he is to become the Prime Minister of Singapore, cannot become the Prime Minister of Singapore.

A third reason, as Dr Lee Tsao Yuan has pointed out, is that corporate managers, and I would include engineers, perhaps even architects, in Singapore, are paid much more than those in some developed countries because of the scarcity of such people in the developing countries around here. So Singapore corporate managers are in demand. Their pay is much higher than a corporate manager's pay in UK or France or even in the US. So a truer comparison is with what others of similar aptitude and competence in the country are paid. This is what benchmarking is all about. You look at what others in equivalent professions are paid in Singapore and then you decide on the pay of the civil servants and the Ministers.

Lastly, I do not agree that the practice of the other countries is the best way to produce good government. If their salaries are low, that does not mean that we have to follow their low salaries, because you can see the impact of their low salaries for leaders and public sector employees, on the quality of their government. I do not think they got the best people for their own public sector. We are trying to evolve our own model to draw top people into Government and that is what, in the final analysis, the White Paper is about, evolving our own model for governing Singapore, for recruiting, retaining and remunerating top people.

If I may give an example of elections. We do not just copy what is done in the West. In US, in Japan, Thailand, Taiwan, you have got to have money to take part in politics. If you do not have, you borrow and, hopefully, you repay your loans later on. The US is now having their Congressional elections. It is reported that up to now the rivals have spent US$88 million on campaigning and the spending is still increasing. In California, Republican Michael Huffington spent a record US$25 million of his own money up to 20th October to unseat his Democratic Senator rival. He is from Texas. He is an oilman. His father's wealth helped to finance him and he has his own wealth to do so. Senator Edward Kennedy used his suburban residence as collateral to borrow US$2 million and lent it to himself for the campaign, which means that after the campaign is over, the campaign fund must reimburse him for the loan which he has given.

The point I am making here is that if you follow their system where money is required to fight elections, you will end up only with very wealthy people in Parliament. People with independent means, people with huge resources, to fight elections, to win, to come to Parliament, in their case, Congress. We have never followed this style. We have made our elections cheap in the sense that you are not required to be rich, and in fact you cannot spend more than a dollar per voter. So if you look around, we have a very different kind of Members of Parliament. If we change the rules, it will be a very different Parliament, different character altogether. I use this to illustrate that we have never blindly followed what others do. We set out to create our own model.

For Ministers, most other countries just leave it to chance. They go on the basis that people must have that passion for politics. They therefore will join a political party, prove themselves and end up as candidates for election. If they win, then maybe the better ones, or those with more political influence, will be appointed Ministers. I do not think we can leave that to chance. I use my personal example and I can quote the other Ministers as example. If we just leave it to the conventional method, I think you will be having very few of us here in Parliament.

Would you get good people to come in had the PAP not scoured the whole of Singapore to look for people like ourselves in Parliament? I think there will always be people who want to be in Parliament. But what kind of people will come in? Maybe once in a while we get exceptional people - good character, good ability, really good for the country, even under today's circumstances. But you need more than one or two people to run the Government. So we systematically look for people who can contribute and I have from time to time told you of the tremendous difficulty I am facing. I have invited Members of Parliament to let me know if they have good contacts. Dr Kanwaljit Soin knows my problem and she has in fact sent me one or two names, and I urge the others to do so, so that we can follow up on the names.

Up to now, most of the people whom we have identified came mainly from the public sector, but I am getting a little more worried because in the last few years it was not just from the public sector, it was actually from the SAF - DPM Lee Hsien Loong, BG George Yeo, Lim Hng Kiang, Teo Chee Hean. Our base is getting to be too narrow. No matter how bright and able these officers are, I do not want to end up with a Cabinet comprising people with no other experience than the SAF. I think it is bad for the Cabinet and it is bad for the country. We need people from outside the SAF, in the public sector and, more importantly, we are hoping to recruit two or three from the private sector, and that is where the problem begins. Who are they, where are they, and would they come if we find them?

If we do not use this present method to systematically look for people outside, just looking at the people outside now who want to come in from the Opposition camp, who do we end up with in Parliament? I think from the SDP you may have Chee Soon Juan. Would you give him $63,000 per month to be the Prime Minister of Singapore because that is the assessed sum for a decent lifestyle for the Prime Minister? I am amazed at SDP MPs' reaction. If anybody calls Matthias Yao or Vasoo a cheat or a liar, and Matthias Yao and Vasoo do not sue, they will be sacked from the PAP right away. If anyone outside makes an allegation against a Minister which is defamatory and the Minister does not sue, that Minister will be investigated. I am surprised that SDP MPs are prepared to work for somebody who has been called a cheat and a liar and who has not sued. So the system which we want to work is to keep out such people from Parliament. Yes, they will contest at elections against us. But we will make sure that we will have a team of people who can keep out such people from Parliament. So we have developed our own way of screening candidates, testing them, asking them to stand for elections and also our own way of paying the Ministers.

The tone of a country is set by the Government, in particular the Prime Minister. This is not a spendthrift Government. I am entitled to an official residence. I do not live in it. When I became Prime Minister in November 1990, I took over Mr Lee Kuan Yew's official car. It was about five years old. I did not buy a new car. I am still using that same car today. It is a 1984 model, purchased in 1985. In the private sector, in the past, I do not know about now, I think a new car would be bought for the CEO every five years. Now, perhaps, with the higher cost of cars, it could be seven years. In the public sector service, the Instruction Manual says that a car can be changed after the seventh year. But there is no need for me to change my car so long as it is still working.

If I may give you another illustration. Normally, I would not want to talk about what we do. But I have to give these examples to show that we are not here to vote for more pay for ourselves. So I have to be a little immodest over here when I go through what I have decided for myself and for my colleagues. On performance bonus, Parliament agreed that the Prime Minister's bonus should be fixed at two months prior to this year's revision. I never took two months' performance bonus. I took one month. I gave the Senior Minister one month's performance bonus. Surely, he is worth more than one month's performance bonus.

We have 33 political office-holders. I have total discretion to decide on how much they get, from zero to a maximum of two months. I assessed what they should get on the basis of their performance for that year, also their workload for that year because a Minister can be very able, can be very good, but for that year, if the workload is much less because of circumstances, then the performance bonus could be less than the usual. The average for all the 33 office-holders is 0.92 month, not even one month. I could have given all the PAP Ministers and office-holders a minimum of one month, and many two months. But we did not do that.

But, maybe in retrospect, perhaps I should have taken two months' performance bonus. One, people do not know it and I pay a political price because the figure for the PM's salary includes the two months' bonus. It is published. Two, it might be better to take the one month's bonus and then give it to charity, or give it to the FAS for the soccer training award for the young footballers. Why save money for the Government?

Some people have advised me against being too straightforward with the people. They think I am too open, too candid, too honest. So they said in this exercise of benchmarking salaries to the private sector and, even before this, when we had the debate on Ministers' salaries in December last year, that I should not go for the total wage figure, what you call the clean wage system. Hide it under perks and privileges, give a car to each Minister, allowance for entertainment, maybe allowance for travel, gardener's allowance, travel allowance, all kinds of allowances which would not appear in the book's published figures, which you do not see. If you do that, I think we can massage the figure down to about 60% of what it appears in the White Paper. Because there is a range of variable bonuses which you cannot calculate in advance - performance bonus, bonus based on the economic growth of the country. This can be left out because we cannot actually fix it until the year is over.

But I decided that this would be hypocritical. This is not how I want to run Singapore. And my colleagues also agreed with me that we should be honest with the people. If this is what costs the country, this is what you will see. So the figures which you see are the cost to the country. We have no additional perks. Yes, there is a tax-free car allowance. But it is recomputed with tax imputed, and that figure also appears in the published figures. It is a part of the salary. No housing allowance, no holiday allowance, and we pay tax. As Tan Cheng Bock remarked, many people thought we do not pay tax. We pay tax on every cent of our salary. We pay our own PUB bills. We pay our own telephone bills. I changed the system when we moved into time-based system. I thought it is not fair if we pay for the telephones of MPs or Ministers now that we have moved to a time-based system, because we do not know who will be using the telephone at home. So I changed the system. We pay for our own telephone bills and we pay for our own hospitalisation bills. If DPM is so unlucky as to suffer a relapse of his lymphoma, he has to pay for his own treatment.

Are we wise in being so open with the people? Can the voters ever understand? Will the Opposition ever stop playing at politics? I do not think the voters can ever understand, if you look at issues in isolation. But you must have faith in them. At the end of the day, it is how their lives are affected by the Government. That will determine how they will vote. And that faith we must have. We must have faith that we can assemble a team both for Government, the political component, as well as for the civil service, to be able to give the people a better life.

I can expect the Opposition MPs to play this political game: put it to the people to decide. But I am surprised that Walter Woon should also fall into the same trap when he suggested that the matter should be put to a referendum. I thought he made good points generally, but this one took my breath away. I have got to confess quite openly. But as the Senior Minister countered on Tuesday, is it within the realm of experience of the people to decide on such an issue?

Walter Woon is wrong to say that shareholders decide on directors' pay. They do not. It is the non-executive directors who will decide on the pay of the executive directors. The non-executive directors normally get an allowance and even if they give themselves a big allowance, it is decided not by all shareholders, but by a few major shareholders whom they actually represent. They could be the proxies for the shareholders.

Assoc. Prof. Walter Woon (Nominated Member): May I seek a point of clarification, with your permission, Mr Speaker? I did not want to get into technicalities, Mr Prime Minister. But if the board of directors is interested in any contract or any transaction, the law says that it goes back to the shareholders. This has been established for a long time. You should read perhaps the case of Erlanger v New Sombrero Phosphate Company 1878 decision of the House of Lords, Re Halt Garage (1964) Ltd 1980 decision of Justice Oliver, now Lord Oliver, Guinness Pte Ltd v Saunders 1990 decision of the House of Lords. I would be happy to supply you full citations at any time, Mr Prime Minister.

The Prime Minister: Thank you for your legal clarification on those points. But generally, on salaries, where there is no big conflict of interest, it is the non-executive directors who decide on the salaries for the directors. The directors who decide on the salary of the CEO may not be directors on the board.

Yes, Mr Chiam and of course Mr Low Thia Khiang say to let the people decide. Then the Straits Times also jumped in, banner headlines, "Let the people decide". In the final analysis, it is the people who decide but they cannot decide on this issue in isolation. You got to give them alternatives. You got to give them the package. The issue to be put to the voters, because they will decide in the end, is what does it cost the country to have the PAP Government, and what are the benefits which they can get out of having the PAP Government. I am going to invite the SDP and also the Workers' Party to tell me what it will cost Singapore if you have a SDP government or a Workers' Party government. How much would you pay your prime minister? How much would you pay your Finance Minister? It can be lower than the $22 million which should be in place after a few years' time. Would it be a $10 million, $5 million SDP government, or would it be $20 million?

Then we give the people three choices, and that should be the issue which should be fought in the election, which I will call in due course. State the price of your government. State your vision. What would you do for them? "Dare to Change" for the SDP? For Workers' Party, I do not know what their slogan will be. Perhaps it is "Time to Go". Then we decide. Dare to change, change to what? Our programmes, HDB upgrading, share-owning society, plus a host of other programmes which we will announce for the people. Then there is a meaningful choice for the people. You cannot just go to election or referendum on one single issue such as this.

Since we are talking about going to the people, I think just for our own satisfaction, we should perhaps go through the SDP's shadow Cabinet list. Who would you have as your PM? I am not sure whether it would be Ling How Doong or Chee Soon Juan. Finance Minister, I think the Party treasurer is the most qualified to be the Finance Minister of Singapore, Cheo Chai Chen. Mr Chiam, you can put a question mark because I am not sure where he would be. That is the basis for the people to decide.

In fact, I think for the next election, perhaps I should start a convention, name the core list of your leaders. I will name five of my key people, SDP names five of the key people, Workers' Party names five. Put the salaries against these people, we go for election. Then the people can decide. If they want to have a cheap government, by all means, it is their choice. They can choose a cheap government, or lowest tender, lowest cost, go ahead. Or would the people begin to think that that is a silly way of employing a government or a CEO for a company? The way to do so is what can the CEO do for me? Then he will start asking, not how much Ministers are paid, but what Ministers can do for them. And this is what I want to get Singaporeans to understand. What can the Government do for you?

There were a few other, I would say, silly remarks. I will dispose of them very quickly. Ministers have power, therefore, take less pay. I think this is a childish argument. Yes, we have power, but this is the power to do good, not a power to benefit ourselves. Privileges, shaking hands with Kings, Queens and Presidents. Come off it!

Prestige, yes. Ministers in Singapore have tremendous prestige. MPs in Singapore have tremendous prestige. But how did the prestige come about? Did it come about just because you are an MP or because you are a Minister? In the UK, I have read a survey where they asked the people to rank the prestige of the various professions, doctors, lawyers and so on. Ministers, MPs, are ranked at the bottom, except for journalists. In the US, I have read similar reports and politicians are ranked right at the bottom, except for used car salesmen. I did not know that lawyers are also ranked somewhere below the MP.

The prestige is not automatic. It is earned. It is earned because we have over the last 40 years run an efficient, clean Government. And that is the kind of prestige which I want to be able to maintain for the next generation and, hopefully, my successor will continue to maintain it - clean, competent Government. Then there will be prestige for all of the MPs in this House. And I think even the Opposition MPs acquire some prestige as a result of the PAP's system.

Some people argue that most of the work is done by civil servants and hence you do not require good Ministers. They are wrong. The Senior Minister has given you illustrations from his generation of leaders to show that that was wrong. I will give you some illustrations to show that it is also wrong to come to that perception for today's Ministers.

A competent government requires both good civil servants and good Ministers. In fact, it requires that the Ministers be better than the civil servants. Civil servants, I would say almost by definition, do not innovate. They are not entrepreneurs. They are there to manage and maintain the system. They help to formulate policies. They work out the pros and cons. They spell out the details and they implement them. From time to time, they do initiate policies. But by the very nature of the civil service, they do not make bold moves. They cannot make bold moves. Those must be done by the Ministers.

I will give you four examples. The first example is the HDB upgrading programme. This is a project costing $20 billion, lasting 20 years which will be 80% subsidised by the Government. No civil servant will have the boldness to propose such a programme. It is not a criticism of the civil servants. It is not within their portfolio, within their mission. This is a job for the Ministers. The upgrading decision did not follow from any staff paper by the civil servants. Ministers visit housing estates. They look at the old housing estates and they know that younger people are moving out from the older housing estates to newer ones at Bishan, Tampines, Pasir Ris. So they could see that the older housing estates were being hollowed out as these young people move and the old ones remain. So if we do not do something to the older housing estates, before long you are going to get very, very old people living in very old housing estates, and slums may emerge in the older housing estates.

Mr Dhanabalan first directed this upgrading exercise. He went to Europe together with Mr Lim Hng Kiang who at that time was in the HDB. Dr Richard Hu took over and now Mr Lim Hng Kiang is in charge of the programme. The decisions which they got to take include what kind of a package for the upgrading, how much residents should pay and the basis for choosing neighbourhoods. This is an example of a programme where Ministers make a difference to people's lives.

The second example - Singapore Telecom IPO. The decision to corporatise and then float Singapore Telecom was initiated by the Ministers. We also decided to distribute Singapore Telecom shares widely amongst citizens to make Singapore a share-owning society. That is a political decision. That is not a civil service decision, to make Singapore a share-owning society. We wanted to do this on a scale never achieved anywhere else in the world. The civil servants got down to work. They appointed lead managers to work out at what price to sell Singapore Telecom shares and what discount to give to Singaporeans. They almost finalised the structure with the lead managers. Then one day, DPM came to see me. He said that Dr Yeo Ning Hong had told him that the ST price which would be quoted on the market at IPO was too low, and we would be giving so much money away. DPM felt the same way. Also, he felt that there were other issues to be resolved - policy issues, not technical issues, which could not be done by the civil servants. For example, how much discount for shareholders and the quantum of loyalty bonus to prevent stagging.

I asked him what was the solution. He suggested we form a Ministerial committee to deal with policies. I agreed. DPM chaired the committee. Then we had the Minister for Finance, Dr Richard Hu; Minister for Communications, Mr Mah Bow Tan; and Dr Yeo Ning Hong, the previous Minister for Communications and Information on the committee. The committee was assisted by the working level committee chaired by Mr Lim Siong Guan who was then Chairman of the CPF and also Permanent Secretary (Defence). It comprised civil servants from all key Ministries and agencies. Everything went smoothly. The civil servants did a wonderful job, attending to details and many real, practical problems.

The Government collected $4.2 billion from the ST listing, double the amount of revenue originally estimated by the lead managers. In other words, it saved the Government $2 billion. The lead managers earned over $33 million from the Singapore Telecom listing, nearly $9 million in professional fees and nearly $25 million in commissions. And I would say that the lead managers fully deserved their earnings.

I think the Ministerial committee should be given $12.5 million commission on the extra $2 billion which they collected for the Government. That is the price which they would have got if they were outside doing a job for Singapore Telecom. But they got nothing, not the civil servants, not the Ministers, not a cent. It is part of their normal job.

The $33 million earned by the lead managers is sufficient to pay all the political office holders for two years. In one exercise, they earned that much. That is enough to pay all of us for two years. The $2 billion collected for the Government is sufficient to pay all of us at the revised salaries for 100 years.

The third example where Ministers make a difference to the work of the civil service is the GST. When the GST was introduced earlier this year, I regard it as the greatest non-event. And this is as a result of careful preparations before-hand to design the tax, to prepare the legislation, to work out a comprehensive offset package and to carry out extensive public education. The MOF, Inland Revenue Authority, MITA, MTI and MAS were all involved.

The first draft of the GST White Paper in May 1992 was put up by the civil servants. But the draft dealt with the technicalities of the GST, and these were not answers which the public wanted to hear or see in the White Paper. They want to know what is the rate of the GST, what pain it will cause them, how they would be protected from the GST. Again, we got the Ministers involved. The Ministers who worked on the GST along with the civil servants were Deputy Prime Minister, Minister for Finance, Dr Richard Hu, the Minister for Trade and Industry, at that time Mr Dhanabalan, and later Minister of State for Finance, RAdm Teo Chee Hean.

The draft was circulated many times to the Ministers for inputs. By the time the White Paper was published, it had been redrafted more than 30 times, and it was not just technical redrafting. The whole approach had been totally changed. Other countries have sacrificed their Finance Ministers when they introduced GST. I did not have to sacrifice Dr Richard Hu.

Let me give you the last example which gives a very different facet of the work of civil servants and the Ministers, and in a way the strength required of civil servants and Ministers when they have to manage a crisis. This is the SQ 117 hijacking. SQ 117 was hijacked on 26th March 1991. The Executive Group (EG) comprising key Permanent Secretaries convened at Changi Airport to deal with the crisis. The EG comprised three key Permanent Secretaries - the PS (Home Affairs) as Chairman, PS (Defence) and PS (Foreign Affairs). The acting Chairman was Mr Lim Siong Guan because the Chairman, BG Tan Chin Tiong, was away overseas. The other key player was Mr Peter Chan, then PS (Foreign Affairs).

The EG was formed a few years earlier when I was in the Defence Ministry. I suggested that we should have such a group to deal with contingencies. I knew the capabilities of the EG. I knew who were in the Executive Group and I knew the resources that they could muster to deal with emergencies, and crisis of this nature. The EG reported to the Minister for Home Affairs, at that time, Prof. Jayakumar. When the hijack took place, both Jayakumar and Yeo Ning Hong rushed to the airport. They were there together with the civil servants for the entire episode. Jayakumar kept me briefed on developments. The Ministers had to approve every key decision which had to be taken at each stage of the crisis. Uppermost in their minds was the safety of the passengers.

At 6.43 am, Lim Siong Guan and the Chief of Defence Force, General Ng Jui Ping, reported to Jayakumar and Yeo Ning Hong that the situation was becoming critical. The hijackers were getting violent. They had doused the cockpit and the various instruments with alcohol. They threatened to kill people in five minutes if their demands were not met, and the threat was taken seriously because earlier on they had pushed out of the cabin two members of the aircraft crew.

Lim Siong Guan asked for immediate approval to storm the plane. The two Ministers had to decide there and then. There was no time to ring me up for the final decision. Jayakumar asked General Ng: "Are your men ready?" "Yes, Sir," replied General Ng. Then the Minister said, "Proceed." By 7.00 am it was all over. A few minutes after that, Jayakumar rang me up. He said, "PM, it is all over. All the hijackers had been killed. No passenger was injured."

Jayakumar and Yeo Ning Hong took the right decision, and the civil servants also came to the right assessment and gave the right recommendation to them. But they were also lucky. Supposing they were unlucky and the passengers were injured or killed. They would have been accountable, not the civil servants. Not Lim Siong Guan, Peter Chan, Ng Jui Ping or the Special Forces that were there. The Ministers must take responsibility if things had gone wrong. I, as Prime Minister, would also have to take responsibility. I was Prime Minister at that time only for about four months.

Jayakumar, Yeo Ning Hong, Lee Hsien Loong, Lim Siong Guan, these are the kind of people we want for Cabinet and for the Administrative Service. Lim Siong Guan was made Staff Grade I officer this year. Do not tell me that he is not worth over half a million dollars a year? Philip Yeo, not involved in all this, but also another Staff Grade I officer, is Chairman of EDB and Chairman of Sembawang. He is now tasked by the Government to use Sembawang as a vehicle to extend our investments into the region. He built up the defence industry, the Singapore Technologies Group. If Philip Yeo were not committed to the public service, he could easily go into the private sector and command a salary of over $1 million. No problem. There will be many people bidding for his services.

So we come back to the basic question: what kind of Government do you want? That is, what kind of people do we target at to recruit for Government? Having targeted them, how do we pay them? Those who look at the salaries and say, "Wah, so high" are looking at the wrong end of the telescope. We look at actual people, what they can do and earn. They are able people we want. Of course, we look at other attributes - character, leadership qualities, compassion, dedication, feel for people. We look at actual people and we try to design terms of pay to match the kind of talent we want for Cabinet and the civil service.

If I may illustrate this with the example of the Judiciary and the lawyers. If I want to appoint a Judge, from which pool would I search among the lawyers for a Judge? From the pool of lawyers who earn more than $600,000 a year or the pool of lawyers who earn less, just to save cost for the Judiciary? If I want to appoint a Law Minister sometime in the future and I want to look for a young lawyer today who can be nurtured and groomed to become a future Law Minister or Home Affairs Minister or Foreign Minister, from which pool of young men would I look? From the pool of young men who have potential to earn more than $600,000 a year or from the pool of young men who will never be able to earn that much?

Whilst we are talking about the formula, I have also been thinking for some time now how to accord tangible recognition to those other Singaporeans who laid the foundation for Singapore's progress and prosperity. They are the ones who planted the trees. The fruits which we enjoy today are because of the trees which they planted, the careful nurturing which they gave. They are not enjoying the fruits which we are all enjoying today. Certainly, not to the same extent which the younger generation is enjoying today.

Singaporeans are caught up in a wave of the future, this wave of prosperity. But I think it is good that we sit back and, from time to time, reflect on who made all this possible. To more than just reflect, to recognise their contributions in some tangible ways.

There are three groups of older Singaporeans whose past contributions I would like to recognise, and I would recommend that the House recognise their past contributions in tangible ways. First, the special group of MPs and Ministers whose stout-heartedness and great personal sacrifice made a difference to Singapore's history. They stood for elections between 1959 and before 1968 and retired by 1984, after which date we increased salaries significantly, ie, elections between 1959 and before 1968, those difficult crucial years, and retired before 1984 when we increased salaries. They fought the communists and the communalists, stayed on course despite personal risks to their lives and limbs. Without the courage and loyalty of the Assemblymen and MPs from 1959 to 1965, the Legislative Assembly would have gone to the Barisan Sosialis and Singapore's history would have taken a disastrous turn. Or Singapore would have been intimidated and made to submit after the communal riots of 1964 and 1965. Their salaries were deliberately held down by the Government then because those were difficult times. Salary revisions were only made after the British military forces had been withdrawn without causing massive unemployment.

I am now studying how to give tangible recognition to their past contributions. Only the MPs and the Ministers of this period who have made a difference to the fate of Singapore merit this special recognition. In other words, not all MPs or Ministers will get this tangible recognition. I shall consult the Senior Minister on the eligibility list.

Next, we should not forget the second group, the public sector pensioners who retired before March 1972 when salaries were revised and pensionable public officers brought under the CPF Act. While their contributions to Singapore were not equal to that of the PAP MPs and Ministers, nevertheless, they worked for the Government during those turbulent times to tackle difficult problems. I have asked a working group to settle a fair and workable formula for this group of public sector pensioners. This will not apply to those civil servants who retired after 1972 when salaries have been adjusted.

Third is a group of older Singaporeans who have retired before Medisave was introduced in 1984. They too, as ordinary Singaporeans, have worked hard, supported the Government but have no Medisave today. I shall ask the Minister for Finance to consider topping up their Medisave. I hope to finalise the details within six months.

Lastly, to sum up, on the White Paper, the final test, whether what we are doing is right or wrong, will depend on whether we get good people for the public sector and for Cabinet and whether we can maintain our high standards of integrity and competence, whether we can deliver a better life for all Singaporeans, more homes, better homes, more funds in the CPF, more shares, and whether others can do a better job for us. In other words, is there a better alternative to what we are doing, and to our model of recruiting people for good Government? In the final analysis, the debate is not about Ministers' pay, or benchmarking. It is about your future and your children's future and how we can get a group of men and women to ensure your and your children's future. [Applause].

Mr Cheo Chai Chen (Nee Soon Central): Mr Speaker, Sir, can you allow me to say a few words?

Mr Speaker: Yes.

Mr Cheo Chai Chen: ( In Mandarin): Mr Speaker, Sir, in this debate on the White Paper on the salaries for Ministers and senior public officers, I feel that the White Paper has been emphasising on the importance of money and that the ---

Mr Speaker: Mr Cheo, are you making a speech, or seeking clarification?

Mr Cheo Chai Chen: Mr Speaker, I will withdraw my speech.

Question put, "That this House endorses Paper Cmd. 13 of 1994 on "Competitive Salaries for Competent and Honest Government" as the basis for setting salaries of Ministers and senior public officers."

Mr Low Thia Khiang (Hougang): Mr Speaker, Sir, I call for a division.

Mr Speaker: Hon. Members who support the call for a division will please rise in their places?

Mr Cheo Chai Chen, Mr Chiam See Tong, Dr Kanwaljit Soin, Mr Low Thia Khiang and Assoc. Prof. Walter Woon rose ---

Mr Speaker: There are five Members rising in support of a division. The Clerk will now ring the Division bells. The House divided: Ayes, 61; Noes, 6; Abstention, 1. Ayes Ayes (cont.) Abdullah Tarmugi Lee Hsien Loong Beng Kian Lam, Arthur Lee Kuan Yew Chandra Das, S Lee Yiok Seng Chay Wai Chuen Lee Yock Suan Chen Koon Lap, Kenneth Leong Horn Kee Chin Harn Tong Lew Syn Pau Chng Hee Kok Lim Boon Heng Ch'ng Jit Koon Lim Chun Leng, Michael Chong, Charles Lim Hng Kiang Choo Wee Khiang Loh Meng See Davinder Singh Mah Bow Tan De Payva, John Ong Chit Chung Dhanabalan, S Othman bin Haron Eusofe Goh Chee Wee Peh Chin Hua Goh Chok Tong Shanmugam, K Goh Choon Kang Sidek bin Saniff Harun bin A Ghani Sinnakaruppan, R Ho Kah Leong Sung, Peter Ho Peng Kee Tan Cheng Bock Ho Tat Kin Teo Chee Hean Ibrahim bin Othman Teo Chong Tee Jayakumar, S Vasoo, S Koh Lip Lin Wan Soon Bee Lau Ping Sum Wang Kai Yuen Lee Ching Yen, Stephen Wong, Aline K Ayes (cont.) Noes Wong Kan Seng Cheo Chai Chen Woon, Walter Chiam See Tong Yao Chih, Matthias Imram bin Mohamed Yap Giau Cheng, Eugene Kanwaljit Soin Yatiman Yusof Lee Tsao Yuan Yeo Cheow Tong Low Thia Khiang Yeo Ning Hong Yeo Toon Chia Absention Yeo Yong-Boon, George Yu-Foo Yee Shoon Tan Soo Khoon Zulkifli bin Mohammed

Resolved,

That this House endorses Paper Cmd. 13 of 1994 on "Competitive Salaries for Competent and Honest Government" as the basis for setting salaries of Ministers and senior public officers.